UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Consent Solicitation Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material under § |
CRESTWOOD EQUITY PARTNERS LP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check all boxes that apply):
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules |
Letter
CRESTWOOD EQUITY PARTNERS LP
811 Main Street, Suite 3400
Houston, Texas 77002
To holders of our preferred units:
As announced on August 16, 2023, we have entered into a definitive merger agreement with Energy Transfer LP pursuant to Unitholders
Dear Fellow Crestwood Unitholders,
On behalfwhich Energy Transfer will acquire Crestwood. In connection with the merger and at the direction of Energy Transfer, pursuant to the merger agreement, we are soliciting consents from holders of our preferred units to approve certain proposed amendments to our partnership agreement. The purpose of the BoardConsent Solicitation is to (i) increase the cash redemption price for our preferred units in connection with a cash redemption election in the merger, and (ii) conform certain terms of Directorsour preferred units with Energy Transfer’s other outstanding series of preferred units in order to simplify Energy Transfer’s capital structure following the merger. This consent solicitation is being conducted pursuant to a consent solicitation statement on Schedule 14A, which is filed with the Securities and managementExchange Commission. If the requisite consents in this consent solicitation are obtained and the conditions to the closing of Crestwood, I am pleasedthe merger are satisfied or waived, as applicable, by the parties to invite youthe merger agreement and the merger agreement is not otherwise terminated, the proposed amendment would, among other things, (i) permit us to increase the redemption price payable to holders of our preferred units that make a cash redemption election in connection with the merger; (ii) eliminate the application of a deficiency rate with respect to distributions payable to the holders of preferred units during any quarter in which distributions are accrued and unpaid; (iii) modify the right of holders of our preferred units to participate in special distributions made to holders of our second annual meetingcommon units; and (iv) conform the voting rights of unitholdersthe holders of preferred units to the voting rights of holders of Energy Transfer’s other outstanding series of preferred units. If the requisite consents in this consent solicitation are obtained and the conditions to the closing of the merger are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, (i) holders of our preferred units making a redemption election in connection with the consideration they receive in the merger would receive such cash redemption price as increased pursuant to the proposed amendment and (ii) holders of our preferred units electing to receive preferred units of Energy Transfer with substantially similar terms as our preferred units as consideration in the merger will receive such Energy Transfer preferred units with terms reflecting the proposed amendment.
The proposed amendment would be approved and go into effect if holders of at least two-thirds of the issued and outstanding preferred units consent to the proposed amendment and the conditions to the closing of the merger are either satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated. Holders of our preferred units who wish to consent must deliver their properly submitted consent in accordance with The Depository Trust Company’s Automated Tender Offer Program at or prior to 5:00 p.m., Eastern Time, on Thursday, May 11,October 17, 2023 at 2:00 pm CDT, which(subject to earlier conclusion, termination or extension). We realize your time is valuable, and consequently, we are offering a consent fee of $0.182546 per preferred unit to be paid to holders of preferred units who validly provide (and do not revoke) their consent to the proposed amendment.
In addition, separately from the solicitation of consents to approve the proposed amendment, we will be held virtually via live webcast. Your participationsoliciting votes from holders of our common units and holders of our preferred units to approve the completion of the merger. We will conduct such solicitation pursuant to a separate proxy statement on Schedule 14A, which preliminary merger proxy statement is contained in the meetingRegistration Statement on Form S-4 (File No. 333-274526), filed by Energy Transfer with the U.S. Securities and voteExchange Commission on September 27, 2023. Following effectiveness of such Registration Statement on Form S-4, we will file and mail the definitive merger proxy statement to the Crestwood unitholders.
If the merger is completed, each of our preferred units outstanding immediately prior to the effective time of the merger will, at the election of the holder of such preferred units, in accordance with our partnership agreement, either (i) convert into common units at the then-applicable Conversion Ratio (as defined in the Crestwood Partnership Agreement, currently one Crestwood common unit for 10 Crestwood preferred units), subject to the payment of any accrued but unpaid distributions prior to the effective time of the merger, (ii) convert into a preferred unit of Energy Transfer that has substantially similar terms, including with respect to economics and
structural protections, as our preferred units, as such preferred unit terms may be amended if the requisite consents are obtained in connection with this consent solicitation or (iii) be redeemed in exchange for cash or common units, at the sole discretion of our general partner, at a price of (x) $9.218573 per preferred unit or (y) if the requisite consents are obtained in this consent solicitation, $9.857484 per preferred unit, in each case, plus accrued and unpaid distributions to the date of such redemption. If no election is made by a holder of our preferred units, such holder will be deemed to have elected to receive the new preferred units of Energy Transfer. We have agreed to cause our general partner to elect to pay cash for any preferred units whose holders have elected to have such preferred units redeemed as described in clause (iii) above. Holders of our preferred units that receive our common units pursuant to the foregoing clause (i) will be entitled to receive 2.07 common units of Energy Transfer, each representing a limited partner interest in Energy Transfer, in exchange for each such common unit at the effective time of the merger.
IF THE PROPOSED AMENDMENT IS APPROVED BY THE REQUISITE HOLDERS OF PREFERRED UNITS, THE CONSIDERATION YOU MAY ELECT TO RECEIVE IN THE MERGER, AS A HOLDER OF PREFERRED UNITS, WILL BE AFFECTED IN THE FOLLOWING WAY: (A) IF YOU ELECT TO RECEIVE PREFERRED UNITS OF ENERGY TRANSFER, SUCH PREFERRED UNITS WILL HAVE TERMS REFLECTING THE PROPOSED AMENDMENT, AND (B) IF YOU MAKE A CASH REDEMPTION ELECTION, THE CASH REDEMPTION PRICE WILL INCREASE FROM $9.218573 TO $9.857484 PER PREFERRED UNIT. WE WILL ANNOUNCE THE RESULTS OF THE CONSENT SOLICITATION AS PROMPTLY AS POSSIBLE FOLLOWING THE EXPIRATION DATE OF THIS CONSENT SOLICITATION, AND WE ANTICIPATE THAT YOU WILL HAVE AT LEAST 10 DAYS BETWEEN SUCH ANNOUNCEMENT AND THE DEADLINE TO MAKE A MERGER CONSIDERATION ELECTION FOR YOUR PREFERRED UNITS.
Your consent is important — please readto us and our business. Your broker cannot provide a consent with respect to your preferred units on your behalf until it receives your instructions. Please provide your consent by following 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 investmentcontained in the upstream and midstream sectors comparedConsent Solicitation Statement. We look forward 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.your participation.
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
|
Robert G. Phillips Founder, Chairman and |
CRESTWOOD EQUITY PARTNERS LP
Letter
811 Main Street, Suite 3400
Houston, Texas 77002
CONSENT SOLICITATION STATEMENT
Solicitation of Consents to UnitholdersAmend the
Partnership Agreement from
Holders of Preferred Units (CUSIP No. 226344307)
In
Holders of Preferred Units:
On August 16, 2023, we plan 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 next few years should provide Crestwood’s investors with improved visibility to increasing free cash flow, debt reduction back to our long-term 3.5x leverage target, and greater distribution growth and coverage potential which should lead to attractive capital allocation priorities that drive value creation for our investors.
Finally, I am also pleased to acknowledge the entire Crestwood organization by highlighting recognition from leading third-party organizations for our efforts in sustainability, customer service and operations, and investor 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 operator with a sharp focus on safety, customer service, environmental stewardship, community engagement and a best-in-class employer to our valued employees.
We look forward to the upcoming annual meeting and remain appreciative of your on-going support and investment in Crestwood.
Sincerely,
Robert G. Phillips
Founder, Chairman and
Chief Executive Officer
Carlsbad Processing Plant acquired from Sendero Midstream in July 2022
About Crestwood
Crestwood Equity Partners LP, (NYSE: CEQP) is a publicly traded masterDelaware limited partnership that owns(the “Partnership”, “CEQP”, “we”, “us”, or “our”), entered into an Agreement and operates midstream assets located primarilyPlan of Merger (the “merger agreement”) with Energy Transfer LP (“Energy Transfer”), Pachyderm Merger Sub LLC, a direct wholly owned subsidiary of Energy Transfer (“Merger Sub”), and, solely for the purposes of Sections 2.1(a), 2.1(b), 2.1(c) and 5.21 thereof, LE GP, LLC, pursuant to which the Partnership will merge with and into Merger Sub (the “merger”), with Merger Sub surviving the merger as a direct wholly owned subsidiary of Energy Transfer. If the merger is completed, each Preferred Unit (as defined below) outstanding immediately prior to the effective time of the merger will, at the election of the holder of such Preferred Units, in accordance with the Partnership Agreement (as defined below), either (i) convert into Common Units (as defined below) at the then-applicable Conversion Ratio (as defined in the Williston Basin,Crestwood Partnership Agreement, currently one Crestwood common unit for 10 Crestwood preferred units), subject to the payment of any accrued but unpaid distributions prior to the effective time of the merger, (ii) convert into a new Energy Transfer security that has substantially similar terms, including with respect to economics and structural protections, as the Preferred Units, as such Preferred Unit terms may be amended if the requisite consents are obtained in connection with this consent solicitation or (iii) be redeemed in exchange for cash or Common Units, at the sole discretion of the Managing General Partner, at a price of (x) $9.218573 per Preferred Unit or (y) if the requisite consents are obtained in this consent solicitation, $0.182546 per Preferred Unit, in each case, plus accrued and unpaid distributions to the date of such redemption. If no election is made by a holder of our Preferred Units, such holder will be deemed to have elected to receive the new Energy Transfer securities. We have agreed to cause the Managing General Partner to elect to pay cash for any Preferred Units whose holders have elected to have such Preferred Units redeemed as described in clause (iii) above. Holders of our Preferred Units that receive our Common Units pursuant to the foregoing clause (i) will be entitled to receive 2.07 common units of Energy Transfer, each representing a limited partner interest in Energy Transfer, in exchange for each such Common Unit at the effective time of the merger.
In connection with the merger and at the direction of Energy Transfer, pursuant to the merger agreement, the Partnership and Crestwood Equity GP LLC, a Delaware Basinlimited liability company acting in its capacity as managing general partner of the Partnership (the “Managing General Partner”), are conducting a consent solicitation (the “Consent Solicitation”) pursuant to which we are soliciting consents (“Consents”) from the holders (“Preferred Holders”) of the Partnership’s issued and Powder River Basin. Our operationsoutstanding Preferred Units representing limited partner interests (the “Preferred Units”) to approve an amendment of the Partnership’s Sixth Amended and financialRestated Agreement of Limited Partnership, effective as of August 20, 2021 (the “Partnership Agreement”), as such amendment is set forth on Annex A to this Consent Solicitation Statement (the “Proposed Amendment”).
If the Proposed Amendment is approved by the requisite holders of Preferred Units, the consideration you may elect to receive in the merger, as a holder of Preferred Units, will be affected in the following ways: (a) if you elect to receive a new security of Energy Transfer, such security will have terms reflecting the Proposed Amendment, and (b) if you make a cash redemption election, the cash redemption price will increase from $9.218573 to $9.857484 per Preferred Unit. We will announce the results are divided into three segments that include Gathering & Processing North, Gathering & Processing South and Storage & Logistics.of the consent solicitation as promptly as possible following the Expiration Date (as defined below), which announcement is anticipated to be at least 10 days before the deadline to make a merger consideration election for your Preferred Units, assuming the Expiration Date is not extended.
The Proposed Amendment would amend Section 5.8 of the Partnership Agreement as follows:
1. | Section 5.8(e)(ii)(D) of the Partnership Agreement provides holders the right to have Preferred Units redeemed at a price equal to 101% of the Preferred Unit Price (as defined in the Partnership Agreement) in the event of a Change of Control (other than a Cash COC Event) (as such terms are defined in the Partnership Agreement). The Proposed Amendment would permit us to increase the redemption price payable to holders making a cash redemption election pursuant to Section 5.8(e)(ii)(D) of the Partnership Agreement in connection with the merger from 101% of the Preferred Unit Price (or $9.218573 per Preferred Unit) to 108% of the Preferred Unit Price (or $9.857484 per Preferred Unit); |
2. | Section 5.8(c)(i) of the Partnership Agreement provides that in the event the Partnership fails to pay in full in cash any distribution (or portion thereof) which a Preferred Holder is entitled to receive for a quarter under the Partnership Agreement, (i) then the Preferred Unit Distribution Amount (as defined in the Partnership Agreement) for the immediately following quarter will be $0.2567 per quarter (the “Deficiency Rate”) and (ii) any accrued and unpaid distributions will increase at a rate of 2.8125% per quarter. The Proposed Amendment would eliminate the application of (a) the Deficiency Rate with respect to distributions payable to the Preferred Holders during any quarter in which distributions are accrued and unpaid and (b) the 2.8125% rate of increase per quarter to any accrued and unpaid distributions; |
KEY CORPORATE HIGHLIGHTS
3. | Section 5.8(c)(i) of the Partnership Agreement provides that each Preferred Unit is entitled to share in any special distributions by the Partnership of cash, securities or other property pro rata with the Partnership’s common units (the “Common Units”) as if the Preferred Units had converted into Common Units. Special distributions do not include regular quarterly distributions paid in the normal course pursuant to the Partnership Agreement, so long as such distributions are not in excess of 130% of the quarterly distribution rate for the prior quarter. The Proposed Amendment would provide Preferred Holders the right to receive (and share pro rata with holders of Common Units in) any portion of any quarterly cash distribution made in the normal course to holders of Common Units that is in excess of an amount that is the greater of (i) the amount of the highest previously paid quarterly cash distribution after the date of the merger and (ii) the amount equal to 115% of the quarterly cash distribution for the immediately preceding quarter; and |
4. | Section 5.8(d) of the Partnership Agreement provides that Preferred Holders are entitled to vote as a separate class on any matter that adversely affects the rights, powers, privileges or preferences of the Preferred Units in relation to other classes of Partnership Interests (as defined in the Partnership Agreement). The affirmative vote of a majority of the Preferred Units is required to approve such matters, except that the affirmative vote of two-thirds of the Preferred Units is required (such applicable threshold, the “Voting Threshold”) to approve matters (i) that alter the rights and obligations of the Preferred Units in any material respect, increase or decrease the authorized number of Preferred Units, or otherwise adversely affect the Preferred Units or (ii) when the three largest Preferred Holders collectively own two-thirds of the Preferred Units or certain of our initial Preferred Holders own at least 35% of the Preferred Units. Section 5.8(d) of the Partnership Agreement also provides that the Partnership may, without the affirmative vote of two-thirds of the Preferred Units, create and issue Junior Securities (as defined in the Partnership Agreement) and Parity Securities (as defined in the Partnership Agreement) in an unlimited amount, with respect to Junior Securities, and, with respect to Parity Securities, in an amount not to exceed $300 million in aggregate face value and that shall not be convertible into more than 48,125,000 Common Units, subject to certain restrictions set forth in the Partnership Agreement. The Proposed Amendment would conform the voting rights of Preferred Holders to the voting rights of holders of Energy Transfer’s other outstanding series of preferred units by (a) eliminating the right of Preferred Holders to vote together, on an as-converted basis, with the Common Units as a single class, (b) providing that the affirmative vote of holders of at least two-thirds of the outstanding Preferred Units, voting as a separate class, is required to adopt any amendment to the Partnership Agreement that the Managing General Partner determines would have a material and adverse effect on the rights of the Preferred Units, and (c) providing that the affirmative vote of holders of at least two-thirds of the outstanding Preferred Units, voting together as a class with other parity securities, is required to (1) create or issue any Parity Securities if cumulative distributions on the Preferred Units are in arrears or (2) create or issue any Senior Securities (as defined in the Partnership Agreement). |
The foregoing is only a summary of the Proposed Amendment. You are urged to read the full text of the Proposed Amendment, which is set forth in Annex A.
If the Requisite Consents (as defined below) are received by the Tabulation Agent (as defined below) through The Depository Trust Company’s (“DTC”) Automated Tender Offer Program (“ATOP”) (and not revoked) at or prior to 5:00 p.m., Eastern Time, on October 17, 2023 (as may be earlier concluded, terminated or extended, the “Expiration Date”), and the Merger Conditions (as described below) are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, then:
the Partnership will, as promptly as practicable after, and only if, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, pay to the Preferred Holders from whom properly submitted Consents are received by the Tabulation Agent through ATOP on or prior to the Expiration Date (the “Consenting Holders”) a fee in cash (the “Consent Fee”) equal to $0.182546 for each Preferred Unit with respect to which consents are received (and not revoked) on or prior to the Expiration Date;
the Managing General Partner will execute a First Amendment to the Partnership Agreement (the “First Amendment”), which will contain the Proposed Amendment;
the Proposed Amendment will become effective immediately upon execution of the First Amendment by the Managing General Partner, which is anticipated to be immediately prior to the closing of the merger (the time of such execution, the “Effective Time”); and
in connection with the closing of the merger, (i) Preferred Holders making a redemption election in connection with the consideration they receive in the merger would receive such cash redemption price as increased pursuant to the First Amendment and (ii) Preferred Holders electing to receive a new security of Energy Transfer (“ET Preferred Units”) with substantially similar terms as the Preferred Units as consideration in the merger will receive ET Preferred Units with terms reflecting the First Amendment.
Once the First Amendment is executed by the Managing General Partner, the Partnership Agreement will be amended by the First Amendment, and the Partnership Agreement as so amended shall be in effect until the closing of the merger.
If the Requisite Consents are received by the Tabulation Agent through ATOP (and not revoked) at or prior to the Expiration Date and the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, then upon the Effective Time, the First Amendment will become effective and all holders of the Preferred Units will be bound by the terms and conditions of the Partnership Agreement as so amended by the First Amendment until the closing of the merger (i.e., the Partnership Agreement, inclusive of the Proposed Amendment, will govern the terms of the Preferred Units held by all holders and their transferees, regardless of whether such holders have consented to the Proposed Amendment). If the Requisite Consents are received but the Merger Conditions are not satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated then the First Amendment will not become effective and the Consent Fee will not be paid. Receipt of the Requisite Consents is not a Merger Condition.
We have established the close of business on September 22, 2023 as the record date (the “Record Date”) for determining those Preferred Holders entitled to submit Consents with respect to the Proposed Amendment. For the Proposed Amendment to be approved, Consents must be received by the Tabulation Agent through ATOP from holders of at least two-thirds of the issued and outstanding Preferred Units.
To be counted, your properly submitted Consent must be received by the Tabulation Agent on or before the Expiration Date, subject to earlier conclusion, termination or extension of the Expiration Date at the discretion of the Managing General Partner. CONSENTS MAY BE REVOKED IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH HEREIN AT ANY TIME PRIOR TO THE EXPIRATION DATE, BUT NOT THEREAFTER.
In addition, separately from the solicitation of consents pursuant to this Consent Solicitation Statement, we will be soliciting votes from holders of Common Units and Preferred Holders (collectively, “Crestwood unitholders”) to approve the completion of the merger (the “Merger Approvals”). Such solicitation will be conducted by the Partnership pursuant to a separate proxy statement on Schedule 14A (the “Merger Proxy Statement”). The preliminary Merger Proxy Statement is contained in the Registration Statement on Form S-4 (File No. 333-274526), filed by Energy Transfer with the U.S. Securities and Exchange Commission (the “SEC”) on September 27, 2023 (the “Merger S-4”). Following effectiveness of the Merger S-4, the Partnership will file and mail the definitive Merger Proxy Statement to the Crestwood unitholders. The merger is subject to a number of conditions to closing as specified in the merger agreement (the “Merger Conditions”). The Merger Conditions include, among others, (i) approval of a proposal to approve and adopt the merger agreement by Crestwood unitholders, (ii) the absence of any legal order preventing consummation of the merger, (iii) the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) receipt of legal opinions regarding certain tax-related matters, (v) the absence of a material adverse effect on Energy Transfer or the Partnership, and (vi) the Merger S-4 having been declared effective under the Securities Act of 1933 and no stop order suspending the effectiveness of such registration statement having been issued by the SEC, nor proceedings seeking a stop order having been initiated or threatened by the SEC. If the merger is completed, each Preferred Unit outstanding immediately prior to the effective time of the merger will, at the election of the Preferred Holder, in accordance with the Partnership Agreement then in effect, (i) convert into Common Units at the then-applicable Conversion Ratio, subject to the payment of any accrued but unpaid distributions prior to such merger effective time, (ii) convert into a new Energy Transfer security that has substantially similar terms, including with respect to economics and structural protections, as the Preferred Units, as such Preferred Unit terms may be amended if the Requisite Consents are obtained in connection with this Consent Solicitation or (iii) be redeemed in exchange for cash or Common Units, at the sole discretion of the Managing General Partner at a price of (x) $9.218573 per Preferred Unit or (y) if the Requisite Consents are obtained in this Consent Solicitation, $9.857484 per Preferred Unit, in each case, plus accrued and unpaid distributions to the date of such redemption. If no election is made by a holder of Preferred Units,such holder will be deemed to have elected to receive new ET Preferred Units. The Partnership has agreed to cause the Managing General Partner to elect to pay cash for any Preferred Units whose holders have elected to have such Preferred Units redeemed as described in clause (iii) above.
We urge you to read the definitive Merger Proxy Statement as it contains important information about the merger, the terms of the ET Preferred Units to be issued to those preferred unitholders who elect to receive such preferred units in the merger, the risks inherent in owning such preferred units, the Merger Conditions, the special meeting of unitholders to be held for the purpose of obtaining the Merger Approvals, and how to make an election regarding the consideration to be received in the merger. All questions and inquiries regarding the merger should be directed in accordance with the instructions set out in the definitive Merger Proxy Statement.
The Preferred Units trade on the New York Stock Exchange under the symbol “CEQP-P.” The total number of Preferred Units issued and outstanding at September 22, 2023 was 71,257,445. On September 22, 2023, the closing price of the Preferred Units was $9.57 per Preferred Unit.
See “Risk Factors” beginning on page 8 for a discussion of risks that you should consider with respect to the Consent Solicitation.
THE CONSENT SOLICITATION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION, OR THE SIMILAR COMMISSION OR GOVERNMENTAL AGENCY OF ANY FOREIGN JURISDICTION, NOR HAS THE SEC, ANY STATE SECURITIES COMMISSION, OR THE SIMILAR COMMISSION OR GOVERNMENTAL AGENCY OF ANY FOREIGN JURISDICTION DETERMINED WHETHER THE INFORMATION IN THIS CONSENT SOLICITATION STATEMENT IS TRUTHFUL OR COMPLETE. NONE OF THE SEC, ANY STATE SECURITIES COMMISSION, OR ANY SIMILAR COMMISSION OR GOVERNMENTAL AGENCY OF ANY FOREIGN JURISDICTION HAS PASSED UPON THE MERITS OR FAIRNESS OF THE CONSENT SOLICITATION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE CONTAINED IN THIS CONSENT SOLICITATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
We have appointed D.F. King & Co., Inc. as information agent (the “Information Agent”) and the tabulation agent (the “Tabulation Agent” and in both such capacities, the “Information and Tabulation Agent”) in connection with the Consent Solicitation. Its address appears on the back cover of this Consent Solicitation Statement. The Information and Tabulation Agent makes no recommendation as to whether Preferred Holders should deliver Consents in response to the Consent Solicitation.
Requests for assistance in submitting Consents, or for additional copies of this Consent Solicitation Statement, should be directed to the Information Agent. Similarly, questions concerning the terms of the Consent Solicitation should be directed to the Information Agent. The Information and Tabulation Agent’s contact information is set forth on the back cover of this Consent Solicitation Statement.
The Partnership will pay registered brokers and dealers in the United States that deliver consents in the Consent Solicitation from DTC participants and persons resident in the United States (the “Retail SolicitingDealers”) retail soliciting fees. Each Retail Soliciting Dealer that successfully delivers Consents from a retail beneficial owner of the Preferred Units will be eligible to receive a fee (the “Retail Soliciting Fee”) from the Partnership equal to $0.0456365 per Preferred Unit for which a Consent is validly delivered and not revoked by or on behalf of such retail beneficial owner, except for any Preferred Units for which Consents are delivered by a Retail Soliciting Dealer for its own account. The Retail Soliciting Fee will only be paid to each Retail Soliciting Dealer in respect of beneficial owners who deliver Consents in respect of Preferred Units in an aggregate amount of 25,000 Preferred Units or fewer.
The Solicitation Agent for the Consent Solicitation is:
BofA Securities
The date of this Consent Solicitation Statement is September 27, 2023 and is first being mailed to the Preferred Holders on or about September 27, 2023.
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The Proposed Amendment constitutes a single proposal for purposes of this Consent Solicitation, and a consenting Preferred Holder may only consent to the Proposed Amendment in its entirety and may not consent selectively. The Consent Solicitation is being made upon the terms and subject to the conditions contained in this Consent Solicitation Statement. The Record Date for purposes of the Consent Solicitation is the close of business on September 22, 2023. In the sole discretion of the Managing General Partner, however, we may establish a new date that, when chosen, will be deemed to be the “Record Date” for purposes of the Consent Solicitation. Only Preferred Holders on the Record Date will be entitled to consent to the Proposed Amendment. For purposes of book-entry Preferred Units, only the DTC participants (“DTC Participants”) listed on the official DTC position listing as of the Record Date will be entitled to execute the Consent as the registered holder thereof. When we refer to this “Consent Solicitation Statement,” we are referring not only to this Consent Solicitation Statement, but also to the exhibits and other documents that we refer to in, and incorporate by reference into, this document.
In making your decision, you should rely only on the information contained in this Consent Solicitation Statement or the definitive Merger Proxy Statement or information incorporated herein or therein by reference. We have not, and the Information and Tabulation Agent has not, authorized anyone to provide you with any different or supplemental information. If you receive any such information, you should not rely on it. You should not assume that the information in this Consent Solicitation Statement is accurate as of any date other than the date on the cover page or that information we have incorporated by reference is accurate as of any date other than the date of the document incorporated by reference. The delivery of this Consent Solicitation Statement shall not, under any circumstances, create any implication that the information contained in it is correct as of any time subsequent to the date on the cover page or that there has been no change in the information contained in, or incorporated by reference into, this Consent Solicitation Statement. By delivering your Consent to the Tabulation Agent, you represent that you are consenting to the Proposed Amendment based solely on the information contained in, or incorporated by reference into, this Consent Solicitation Statement and your own examination of it and the terms of the Proposed Amendment.
The contents of this Consent Solicitation Statement should not be construed as legal, business, or tax advice. You should consult your own attorney, business advisor, and tax advisor as to those matters. This Consent Solicitation Statement does not constitute a solicitation of Consents in any jurisdiction in which, or to or from any person to or from whom, it is unlawful to make the Consent Solicitation. Persons who receive this Consent Solicitation Statement must inform themselves about and observe any applicable restrictions on the distribution and solicitation of Consents.
This Consent Solicitation Statement is not an offer to purchase securities nor is it a solicitation of Consents from Preferred Holders, nor will Consents be accepted from or on behalf of such Preferred Holders, in any jurisdiction in which, or to or from any person to or from whom, it is unlawful to make such a consent solicitation under applicable securities or “blue sky” laws.
DO NOT FOR ANY REASON DELIVER YOUR PREFERRED UNITS TO US, THE MANAGING GENERAL PARTNER, OR THE INFORMATION AND TABULATION AGENT AT THIS TIME.
CRESTWOOD’S COMMITMENT TO EXCELLENCE
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Notice of 2022 Annual Meeting of
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By Order of the Board of Directors,
Robert G. Phillips
Founder, Chairman and Chief Executive Officer
Houston, Texas
March 31, 2023
Important Notice Regarding the Availability of Proxy Materials for the Crestwood Equity
Partners LP Unitholder Meeting to be Held on May 11, 2023. The Proxy
Certain information set forth in this Consent Solicitation Statement and documents incorporated herein by reference may contain forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our 2022future plans, strategies, and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “would,” “seek,” “intend,” “plan,” “goal,” “project,” “estimate,” “anticipate” “strategy,” “future,” “likely” or other comparable terms and references to future periods. All statements other than statements of historical facts included in this Consent Solicitation Statement and documents incorporated herein by reference regarding our strategies, prospects, financial condition, operations, costs, plans, and objectives are forward-looking statements.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans, and strategies, projections, anticipated events, and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results, financial condition, or intentions to take certain corporate actions to differ materially from those indicated in the forward-looking statements include, in addition to those described in the “Risk Factors” and in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our Annual Report on Form 10-K are for the fiscal year ended December 31, 2022, the inability to secure the Requisite Consents for the Proposed Amendment, market conditions, and potential litigation challenging the Proposed Amendment. In addition, the merger is subject to (i) the satisfaction or waiver of the Merger Conditions, as applicable, by the parties to the merger agreement and the absence of events that could give rise to the termination of the merger agreement, (ii) the possibility that the merger does not close, (iii) risks that the proposed merger disrupts current plans and operations and business relationships or poses difficulties in attracting or retaining employees, (iv) the possibility that the costs or difficulties related to the integration of the Partnership and Energy Transfer will be greater than expected and (v) the possibility that the anticipated benefits from the merger cannot or will not be fully realized.
Any forward-looking statement in this Consent Solicitation Statement or any document incorporated herein by reference is based only on information currently available at www.proxydocs.com/CEQPto us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral that may be made from time to time, whether as a result of new information, future developments, or otherwise, except as may be required under applicable law. You should read this Consent Solicitation Statement completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
THIS CONSENT SOLICITATION STATEMENT (INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN) CONTAINS IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE CONSENT SOLICITATION.
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Summary
This summary highlights some information about us and this ProxyConsent Solicitation Statement. It may not contain all of the information that is important to you. You should read this ProxyConsent Solicitation Statement in its entirety together with the definitive Merger Proxy Statement and 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 ProxyConsent Solicitation Statement is accurate only as of the date of this ProxyConsent Solicitation 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”, “our,”
About the “Company”Partnership
The Partnership, a Delaware limited partnership formed in March 2001, is a master limited partnership that develops, acquires, owns or the “Partnership” refer to Crestwood Equity Partners LPcontrols, and its subsidiaries.
Annual Meeting of Shareholders
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Summary
Integrated Approach to Risk Management
Crestwood is committed to enterprise risk management practices that are inclusive of all disciplinesoperations within the organizationenergy midstream sector. Headquartered in Houston, Texas, we provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and support our goalcrude oil shale plays across the United States. We own and operate a diversified portfolio of shaping ESG in the midstream sector.
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Summary
Corporate Governance Highlights
We remain committed to strong corporate governancenatural gas liquids, crude oil, natural gas, and we demonstrate our corporate responsibility by adhering to the highest ethical standards. Crestwood’s policiesproduced water gathering, processing, storage, disposal, and transportation assets that connect fundamental energy supply with energy demand across North America. Our Common Units are designed to promote exceptional business behavior with a commitment to transparency.
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Board Composition
Mix of director tenure, skills and background provides a balance of experience and institutional knowledge with fresh perspectives
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 |
Table of Contents
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 2022 Annual Report on Form 10-K. Website references throughout this document are provided for convenience only, and the contentlisted on the referenced websites is not incorporated by reference into this document.
Annual Meeting Information
General
The enclosed proxy is solicited byNYSE under 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 May 11, 2023,symbol “CEQP” and any adjournment or postponement thereof. We will conduct 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 our unitholders and employees. Unitholders may participate in the Annual Meeting by registering at www.proxydocs.com/CEQP and entering the control numberPreferred Units are 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. NYSE under the symbol “CEQP-P.”
Our principal executive office is located at 811 Main Street, Suite 3400, Houston, Texas 77002. This proxy statement77002, and our telephone number is first being made available(832) 519-2200. Our website address is https://www.crestwoodlp.com. The information on our website is not part of this Consent Solicitation Statement.
Purpose of the Consent Solicitation
On August 16, 2023, the Partnership and Energy Transfer, among other parties, entered into the merger agreement, pursuant to our unitholderswhich the Partnership will merge with and into Merger Sub, with Merger Sub surviving the merger as a direct wholly owned subsidiary of Energy Transfer. In connection with the merger and at the direction of Energy Transfer, pursuant to the merger agreement, the Partnership and the Managing General Partner are soliciting Consents from the Preferred Holders to approve the amendment of the Partnership Agreement as set forth in the Proposed Amendment contained in Annex A to this Consent Solicitation Statement. The purpose of the Consent Solicitation is to (i) increase the cash redemption price for the Preferred Units in connection with a cash redemption election in the merger, and (ii) conform certain terms of the Preferred Units with Energy Transfer’s other outstanding series of preferred units in order to simplify Energy Transfer’s capital structure following the merger. The Proposed Amendment would amend Section 5.8 of the Partnership Agreement as follows:
1. | Section 5.8(e)(ii)(D) of the Partnership Agreement provides holders the right to have Preferred Units redeemed at a price equal to 101% of the Preferred Unit Price in the event of a Change of Control (other than a Cash COC Event). The Proposed Amendment would permit us to increase the redemption price payable to holders making a cash redemption election pursuant to Section 5.8(e)(ii)(D) of the Partnership Agreement in connection with the merger from 101% of the Preferred Unit Price (or $9.218573 per Preferred Unit) to 108% of the Preferred Unit Price (or $9.857484 per Preferred Unit); |
2. | Section 5.8(c)(i) of the Partnership Agreement provides that in the event the Partnership fails to pay in full in cash any distribution (or portion thereof) which a Preferred Holder is entitled to receive for a quarter under the Partnership Agreement, (i) then the Preferred Unit Distribution Amount for the immediately following quarter will be the Deficiency Rate and (ii) any accrued and unpaid distributions will increase at a rate of 2.8125% per quarter. The Proposed Amendment would eliminate the application of (a) the Deficiency |
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Rate with respect to distributions payable to the Preferred Holders during any quarter in which distributions are accrued and unpaid and (b) the 2.8125% rate of increase per quarter to any accrued and unpaid distributions; |
3. | Section 5.8(c)(i) of the Partnership Agreement provides that each Preferred Unit is entitled to share in any special distributions by the Partnership of cash, securities or other property pro rata with the Partnership’s Common Units as if the Preferred Units had converted into Common Units. Special distributions do not include regular quarterly distributions paid in the normal course pursuant to the Partnership Agreement, so long as such distributions are not in excess of 130% of the quarterly distribution rate for the prior quarter. The Proposed Amendment would provide Preferred Holders the right to receive (and share pro rata with holders of Common Units in) any portion of any quarterly cash distribution made in the normal course to holders of Common Units that is in excess of an amount that is the greater of (i) the amount of the highest previously paid quarterly cash distribution after the date of the merger and (ii) the amount equal to 115% of the quarterly cash distribution for the immediately preceding quarter; and |
4. | Section 5.8(d) of the Partnership Agreement provides that Preferred Holders are entitled to vote as a separate class on any matter that adversely affects the rights, powers, privileges or preferences of the Preferred Units in relation to other classes of Partnership Interests. The current Voting Threshold provides that the affirmative vote of a majority of the Preferred Units is required to approve such matters, except that the affirmative vote of two-thirds of the Preferred Units is required to approve matters (i) that alter the rights and obligations of the Preferred Units in any material respect, increase or decrease the authorized number of Preferred Units, or otherwise adversely affect the Preferred Units or (ii) when the three largest Preferred Holders collectively own two-thirds of the Preferred Units or certain of our initial Preferred Holders own at least 35% of the Preferred Units. Section 5.8(d) of the Partnership Agreement also provides that the Partnership may, without the affirmative vote of two-thirds of the Preferred Units, create and issue Junior Securities and Parity Securities in an unlimited amount, with respect to Junior Securities, and, with respect to Parity Securities, in an amount not to exceed $300 million in aggregate face value and that shall not be convertible into more than 48,125,000 Common Units, subject to certain restrictions set forth in the Partnership Agreement. The Proposed Amendment would conform the voting rights of Preferred Holders to the voting rights of holders of Energy Transfer’s other outstanding series of preferred units by (a) eliminating the right of Preferred Holders to vote together, on an as-converted basis, with the Common Units as a single class, (b) providing that the affirmative vote of holders of at least two-thirds of the outstanding Preferred Units, voting as a separate class, is required to adopt any amendment to the Partnership Agreement that the Managing General Partner determines would have a material and adverse effect on the rights of the Preferred Units, and (c) providing that the affirmative vote of holders of at least two-thirds of the outstanding Preferred Units, voting together as a class with other parity securities, is required to (1) create or issue any Parity Securities if cumulative distributions on the Preferred Units are in arrears or (2) create or issue any Senior Securities. |
If the First Amendment becomes operative in connection with the closing of the merger, (i) Preferred Holders making a redemption election in connection with the consideration they receive in the merger would receive such cash redemption price as increased pursuant to the First Amendment and (ii) Preferred Holders electing to receive ET Preferred Units with substantially similar terms as the Preferred Units as consideration in the merger will receive such ET Preferred Units with terms reflecting the First Amendment. We will announce the results of the consent solicitation as promptly as possible following the Expiration Date, which announcement is anticipated to be at least 10 days before the deadline to make a merger consideration election for your Preferred Units, assuming the Expiration Date is not extended.
Requisite Consents
The adoption of the Proposed Amendment requires the consent of Preferred Holders holding at least two-thirds of the issued and outstanding Preferred Units as of the Record Date (the “Requisite Consents”). See “The Consent Solicitation—Requisite Consents.”
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How to Consent
Preferred Holders who wish to consent to the Proposed Amendment must deliver their properly submitted Consent in accordance with DTC’s ATOP procedures so that it is received on or about March 31, 2023. Referencesbefore the Expiration Date. Do not, for any reason, deliver your Preferred Units to “the Company,” “the Partnership,” “CEQP,” “we,” “us,” “our,” “ours”us, the Managing General Partneror the Information and similar terms referTabulation Agent at this time and do not deliver the Consent to Crestwood Equity Partners LP.any person other than as specified in DTC’s ATOP procedures. See “The Consent Solicitation—How to Consent.”
Outstanding SecuritiesExpiration Date
The Expiration Date is 5:00 p.m., Eastern Time, on October 17, 2023, unless earlier concluded, terminated or extended as provided for in this Consent Solicitation Statement. We may conclude the Consent Solicitation at the earlier of the Expiration Date or the date on which the Tabulation Agent has received the Requisite Consents.
Consent Fee
If the Requisite Consents are received by the Tabulation Agent through ATOP (and not revoked) at or prior to the Expiration Date and Quorum
Onlythe Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, then the Partnership will, as promptly as practicable after, and only if, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, pay to the Consenting Holders from whom properly submitted Consents are received by the Tabulation Agent on or prior to the Expiration Date a Consent Fee equal to $0.182546 for each Preferred Unit with respect to which consents are received (and not revoked) on or prior to the Expiration Date. No Consent Fee will be paid with respect to any Preferred Units for which no Consent is delivered on or prior to the Expiration Date, even though the Proposed Amendment, if approved, will bind all holders of recordsuch Preferred Units and their transferees upon the effectiveness of our common unitsthe Proposed Amendment.
Conditions to the Consent Solicitation
The Proposed Amendment will not become operative unless and preferred units (collectively, “Units”) atuntil the closeRequisite Consents are obtained and the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated. If the Requisite Consents are received but the Merger Conditions are not satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, the First Amendment will not become effective and the Consent Fee will not be paid. Receipt of businessthe Requisite Consents is not a Merger Condition. See “The Consent Solicitation—Conditions to the Consent Solicitation.”
Revocation of Consents
Prior to the Consent Effective Date (as defined below), any Preferred Holder may revoke any Consent given as to its Preferred Units or any portion of such Preferred Units. Only a Preferred Holder on March 15, 2023, the record date,Record Date may deliver a Consent or revoke any Consent previously delivered by such Preferred Holder. Any person or entity that becomes a holder of the Preferred Units after the Record Date will not have the authority to deliver a Consent to the Proposed Amendment or to revoke any Consent previously delivered by a Preferred Holder relating to the Preferred Units held by the subsequent holder. Preferred Holders who wish to exercise their right of revocation with respect to a Consent must give a properly transmitted “Requested Message” through ATOP, which must be received by the Tabulation Agent through ATOP, prior to the Consent Effective Date. See “The Consent Solicitation—Record Date” and “The Consent Solicitation—Revocation of Consents.”
Appraisal Rights
You will not be entitled to rights of an objecting unitholder or appraisal rights under Delaware law in connection with the Proposed Amendment or this Consent Solicitation. See “The Consent Solicitation—No Appraisal Rights.”
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NYSE Listing of ET Units
It is a condition to the closing of the merger that the ET Common Units (as defined below) and new ET Preferred Units to be issued in the merger to Preferred Holders be approved for listing on the NYSE, subject to official notice of and to vote at,issuance. Although the Annual Meeting. Onmerger agreement requires that date, we had 105,354,037 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 itemnew ET Preferred Units issued in connection with the merger be listed on the NYSE, there can be no assurance that such new ET Preferred Units will continue to be voted on atlisted in the Annual Meeting. Each preferred unitholder is entitledfuture.
Additional Information
Requests for assistance in submitting the Consent, or for additional copies of this Consent Solicitation Statement, should be directed 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 majorityInformation Agent. Similarly, questions concerning the terms of the aggregate outstanding UnitsConsent Solicitation should be directed to the Information Agent. The Information and Tabulation Agent’s contact information appears on the back cover of this Consent Solicitation Statement. The Information and Tabulation Agent makes no recommendation as to whether Preferred Holders should deliver Consents in response to the Consent Solicitation.
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QUESTIONS AND ANSWERS ABOUT THE CONSENT SOLICITATION
The following are some questions regarding the Consent Solicitation that you may have as a Preferred Holder and the answers to those questions. We urge you to read carefully the entire Consent Solicitation Statement, including the section 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“Risk Factors” and our Annual Report on Form 10-K for the year ended December 31, 2022 and view instructions on how to vote viaany subsequent quarterly or current reports filed with 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 includedSEC. Additional important information is contained in the Noticeremainder of Internet Availabilitythis Consent Solicitation.
What is the purpose of Proxy Materials. If you have previously electedthe Consent Solicitation?
As announced on August 16, 2023, the Partnership entered into a definitive merger agreement with Energy Transfer pursuant to receive our proxy materials via e-mail, youwhich Energy Transfer 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, insteadacquire the Partnership. In connection with the merger, at the direction of in print. This means that accessEnergy Transfer pursuant to the Annual Report on Form 10-K, Proxy Statement,merger agreement, we are soliciting consents from Preferred Holders to approve the Proposed Amendment. The Proposed Amendment would, among other things, (i) permit us to increase the redemption price payable to Preferred Holders that make a cash redemption election in connection with the merger, (ii) eliminate the application of a Deficiency Rate with respect to distributions payable to the Preferred Holders during any quarter in which distributions are accrued and unpaid; (iii) modify the right of Preferred Holders to participate in special distributions made to holders of Common Units; and (iv) conform the voting rights of Preferred Holders to the voting rights of holders of Energy Transfer’s other correspondenceoutstanding series of preferred units. The purpose of the Consent Solicitation is to (i) increase the cash redemption price for the Preferred Units in connection with a cash redemption election in the merger, and (ii) conform certain terms of the Preferred Units with Energy Transfer’s other outstanding series of preferred units in order to simplify Energy Transfer’s capital structure following the merger.
If the Requisite Consents are obtained and the merger is completed, what will be deliveredPreferred Holders receive for their Preferred Units in the merger?
If the merger is completed, each Preferred Unit outstanding immediately prior to you via e-mail.
Proxy Voting
Units that are properly voted via the Internet, mobile device, or by telephone or for which proxy cards are properly executed and returnedeffective time of the merger will, be voted at the Annual Meetingelection of the Preferred Holder, in accordance with the directions givenPartnership Agreement, either (i) convert into Common Units at the then-applicable Conversion Ratio, subject to the payment of any accrued but unpaid distributions prior to the effective time of the merger, (ii) convert into a new Energy Transfer security that has substantially similar terms, including with respect to economics and structural protections, as the Preferred Units, as such Preferred Unit terms may be amended if the Requisite Consents are obtained in connection with this Consent Solicitation or (iii) be redeemed in exchange for cash or Common Units, at the absencesole discretion of directions,the Managing General Partner, at a price of (x) $9.218573 per Preferred Unit or (y) if the Requisite Consents are obtained in this Consent Solicitation, $9.857484 per Preferred Unit, in each case, plus accrued and unpaid distributions to the date of such redemption. If no election is made by a holder of Preferred Units, such holder will be voted in accordance withdeemed to have elected to receive new ET Preferred Units. The Partnership has agreed to cause the Board’s recommendations as follows: “FOR” the election of each of the nomineesManaging General Partner to the Board named herein; “FOR” the ratification of the appointment of our independent auditors; “FOR” approval, on
Annual Meeting Information
an advisory basis, of our executive compensationelect to pay cash for any Preferred Units whose holders have elected to have such Preferred Units redeemed as described in this proxy statement and “FORclause (iii) above. Preferred Unitholders that receive Common Units of the amendmentPartnership pursuant to our 2018 Long-Term Incentive Plan. Itthe foregoing clause (i) will be entitled to receive 2.07 common units of Energy Transfer (the “ET Common Units”), each representing a limited partner interest in Energy Transfer, in exchange for each such Common Unit of the Partnership at the effective time of the merger. We will announce the results of the consent solicitation as promptly as possible following the Expiration Date, which announcement is anticipated to be at least 10 days before the deadline to make a merger consideration election for your Preferred Units, assuming the Expiration Date is not expected that anyextended. For 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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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 institutioninformation on how to vote your shares. You may provide these instructions by voting viamake an election regarding the Internet, mobile device, by telephone, or (if you haveconsideration to be 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 duringmerger, please see the Annual Meeting, the institution that holds your Units cannot vote your Units at the Annual Meeting.definitive Merger Proxy Statement.
Voting Standard
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 unitsWhat consent threshold is currently 10-to-1, but may be adjusted to account for unpaid distributions 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. Proposed Amendment?
For these matters, abstentions arethe Proposed Amendment to be approved, Consents must be received by the Tabulation Agent through ATOP at or prior to the Expiration Date (and not counted as affirmative votes on a matter but are counted as presentrevoked) from holders of at least two-thirds of the issued and entitled to vote, and broker nonvotes, if any,outstanding Preferred Units.
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If the Proposed Amendment is approved, when will have no effect on the outcome of these matters.
RevocationProposed Amendment become effective?
If you own Units of record, you may revoke your proxythe Requisite Consents are received by the Tabulation Agent through ATOP (and not revoked) at or change your voting instructions at any time before your Units are voted at the Annual Meeting by deliveringprior to the Expiration Date and the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, the Managing General Partner will execute a written noticeFirst Amendment to the Partnership Agreement, which will contain the Proposed Amendment. The Proposed Amendment will become effective immediately upon execution of revocationthe First Amendment by the Managing General Partner, which is anticipated to be immediately prior to the closing of the merger.
If I do not approve the Proposed Amendment, but the Proposed Amendment is approved by the requisite number of Preferred Units, how will my Preferred Units be affected?
If the Requisite Consents are received by the Tabulation Agent through ATOP (and not revoked) at or a dulyprior to the Expiration Date, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, and the First Amendment is executed proxy (viaby 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 employees.
You are entitled to participate in the Annual MeetingManaging General Partner, even if you weredo not approve the Proposed Amendment by submitting a unitholder asConsent, you will still be subject to and bound by the First Amendment until the closing of the close of business on March 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 websitemerger, 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. The meeting rules, procedures and code of conduct will be posted 15 minutes before the meeting 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 11, 2023. If you have difficulty accessing the meeting, please call the technical support number that will be posted in your instructional emailtime you will receive after registering to attend the Annual Meeting. We willconsideration you have technicians available to assist you.
Proposal 1 — Election of Class II Directors
Board and Governance Structure
General Overview and Board Makeup
The Board currently has nine members, including the CEO, who currently serves as Chairman of the Board. 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 II Directors Standing for Election at the 2023 Annual Meeting
The Board has currently fixed the number of directors constituting the Board at 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 2026 annual meeting of unitholders or until his or her successor shall have been elected and qualified:
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Gary Reaves was appointedreceive pursuant to the Boardmerger agreement (or default consideration if no election is made). See “If the Requisite Consents are obtained and the merger is completed, what will Preferred Holders receive for their Preferred Units in the merger?”
How do I deliver my consent to the Proposed Amendment?
Preferred Holders who wish to consent to the Proposed Amendment must deliver their properly submitted Consent in accordance DTC’s ATOP procedures so that it is received by the Tabulation Agent on September 15, 2022, pursuantor before the Expiration Date. Do not, for any reason, deliver your Preferred Units to a Director Nomination and Voting Support Agreement betweenus, the Company and FR XIII Crestwood Permian Basin Holding LLC, a subsidiary of First 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 theManaging General Partner, and has been elected to hold office until the 2023 Annual Meeting or until his or her successor has been elected and qualified. Mr. Lumpkins was appointed to the Board in 2015 and Ms. Vallejo was appointed to the Board in 2021. Both Mr. Lumpkins and Ms. Vallejo were classified as Class II 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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Board of Directors Information
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
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Class III Directors (term expires by 2024 annual meeting of unitholders)
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Board of Directors Information
Class I Directors (terms expire by 2025 annual meeting of unitholders)
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Board of Directors Information
Board Skills & Diversity
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 two 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:
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Among the qualifications and skills of a candidate considered important by the Nominating and Governance Committee are:
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Corporate Governance
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,Information and governance efficiency.
The Chair of the Board is selected by the BoardTabulation Agent, 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 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 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
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 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 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 ondeliver the Board, nor that the Partnership establish or maintain a Nominating and Governance Committee or Compensation Committee of the Board. We are, however, requiredConsent to have an Audit 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, Janeen Judah, 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 usany person other than as a director. In making this determination,specified in DTC’s ATOP procedures. See “The Consent Solicitation — How to Consent.”
When will the Board adheresConsent Fee be paid?
If the Requisite Consents are received by the Tabulation Agent through ATOP (and not revoked) at or prior to the Expiration Date and the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, then the Partnership will, as promptly as practicable after, and only if, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, pay to the Consenting Holders the Consent Fee for each Preferred Unit with respect to which consents are received (and not revoked) on or prior to the Expiration Date. No Consent Fee will be paid with respect to any Preferred Units for which no Consent is delivered on or prior to the Expiration Date, even though the Proposed Amendment, if approved, will bind all holders of such Preferred Units and their transferees upon the effectiveness of the specific tests for independence included inProposed Amendment.
What are the NYSE listing standards and considers all other facts and circumstances it deems necessary or advisable.
A director need not be a memberexpected U.S. federal income tax consequences to Preferred Holders upon the receipt 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 NYSE).
Risk OversightConsent Fee?
The Partnership facesintends to report the Consent Fee as ordinary income paid to Preferred Holders as consideration for their Consents. See “Expected U.S. Federal Income Tax Consequences to Preferred Holders upon Receipt of the Consent Fee.”
For a numberdescription of risks, including environmentalthe material U.S. federal income tax consequences of the merger, see the section titled “Material U.S. Federal Income Tax Consequences of the Merger” in the definitive Merger Proxy Statement.
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The Partnership, a Delaware limited partnership formed in March 2001, is a master limited partnership that develops, acquires, owns or controls, and regulatory risks,operates primarily fee-based assets and others, such asoperations within the impactenergy midstream sector. Headquartered in Houston, Texas, we provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. We own and operate a diversified portfolio of competition. Management is responsible fornatural gas liquids, crude oil, natural gas, and produced water gathering, processing, storage, disposal, and transportation assets that connect fundamental energy supply with energy demand across North America. Our Common Units are listed on the day-to-day management of risksNYSE under the Partnership faces, whilesymbol “CEQP” and our Preferred Units are listed on the Board, as a whole and through its committees, has responsibility forNYSE under 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.symbol “CEQP-P.”
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 related to our commodity price risk management activities. The Compensation Committee assists the Board with risk management related 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, succession planning of the CEO and key executive officers and oversight responsibilities regarding the governance of the Partnership.
Board of Directors Information
Oversight of Cybersecurity Risk
As with any key operational risk, the Company has a robust governance structure around cybersecurity. Our programoffice 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.
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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 that covers a broad range of matters relating to governance, meetings, materials, and other agenda topics.
Board of 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. 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 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 Conduct and Ethics 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:
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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.
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.
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Robert G. Phillips | ||||||||||
Warren H. Gfeller |
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David Lumpkins |
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Clay C. Williams | ||||||||||
Total Meetings in 2022 | 8 | 5 | 7 | 4 | 4 | |||||
2022 Attendance Percentage | 100% | 100% | 90% | 100% | 100% |
Committee Chair
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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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 Partnerlocated at 811 Main Street, Suite 3400, Houston, Texas 77002.77002, and our telephone number is (832) 519-2200. Our website address is https://www.crestwoodlp.com. The written notice must comply with Section 13.4(b)(vi)(A)(2)information on our website is not part of our Partnership Agreementthis Consent Solicitation Statement.
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You should carefully consider the risks and uncertainties described throughout this Consent Solicitation Statement, including those described below, and the proceduresrisk factors set forth in Section 13.4(b)(vi)(C)our annual and periodic reports that we file with the SEC regarding the risks of investment in our securities, before you decide whether to Consent to the Proposed Amendment. You should also read the definitive Merger Proxy Statement for risks relating to the merger.
Risks Related to the Consent Solicitation
The merger as well as the Proposed Amendment may result in reduced liquidity for Preferred Holders electing to receive new ET Preferred Units in the merger.
Although the merger agreement requires that new ET Preferred Unitsissued in connection with the merger be listed on the NYSE, there can be no assurance that such new ET Preferred Units will continue to be listed in the future. Also, if the Proposed Amendment to the Partnership Agreement includingis approved and becomes effective, more Preferred Holders may either (i) convert their Preferred Units into Common Units prior to the information requirements includedcompletion of the merger and therefore receive ET Common Units or (ii) make a cash redemption election in 13.4(b)(vi)(A)(2)connection with the consideration they elect to receive in the merger, which collectively would reduce the aggregate number of our Partnership Agreement. new ET Preferred Units that may be outstanding after the completion of the merger. As a result of any of the foregoing factors, the trading market for such new ET Preferred Units would become more limited than the existing trading market for Preferred Units or the trading market for such units if the Proposed Amendment does not become effective. In addition, after the completion of the merger, Energy Transfer could elect to conduct one or more tender offers for the new ET Preferred Units, which would have the effect of further limiting the trading market for the new ET Preferred Units. A more limited trading market might adversely affect the liquidity and market price of such securities.
The Chairman designatedProposed Amendment will reduce protections afforded to Preferred Holders electing to receive new ET Preferred Units in the merger.
If the Proposed Amendment becomes effective, the terms of the new ET Preferred Units to be received by Preferred Holders electing to receive such units as consideration in the merger will be less restrictive and will afford reduced protection to holders of such units compared to those currently in place and those applicable to the Preferred Units. The Proposed Amendment would (i) eliminate the application of a Deficiency Rate with respect to distributions payable to the Preferred Holders during any quarter in which distributions are accrued and unpaid; (ii) modify the right of Preferred Holders to participate in special distributions made to holders of Common Units; and (iii) conform the voting rights of the holders of Preferred Units to the voting rights of holders of Energy Transfer’s other outstanding series of preferred units.
We have not obtained a third-party determination concerning the fairness of the Proposed Amendment.
We have not retained, and do not intend to retain, any unaffiliated representative to act solely on behalf of the Preferred Holders for purposes of negotiating the Consent Solicitation or preparing a report concerning the fairness of the Proposed Amendment or this Consent Solicitation.
If the Requisite Consents are received on or prior to the Expiration Date, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated and the Proposed Amendment becomes effective, all holders of the Preferred Units will be bound by the Proposed Amendment even if they did not approve the Proposed Amendment by submitting their Consent.
The Proposed Amendment is set forth in Annex A to this Consent Solicitation Statement. If the Requisite Consents are received on or prior to the Expiration Date, the Merger Conditions are satisfied or waived, as
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applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated and the Proposed Amendment becomes effective by execution of the First Amendment by the Managing General Partner, pursuantall holders of the Preferred Units will be bound by the Proposed Amendment even if they did not approve the Proposed Amendment by submitting their Consent.
If the Requisite Consents are received on a date that is prior to Section 13.10the Expiration Date, the Consent Solicitation may be concluded on that date and the Consent Fee will only be paid with respect to Preferred Units for which Consents were delivered on or prior to that date.
The Expiration Date is 5:00 p.m., Eastern Time, on October 17, 2023, unless earlier concluded, terminated or extended as provided for in this Consent Solicitation Statement. We may, at the Managing General Partner’s sole discretion, conclude the Consent Solicitation at the earlier of ourthe Expiration Date or the date on which the Tabulation Agent has received the Requisite Consents. If the Tabulation Agent receives the Requisite Consents on a date that is prior to the Expiration Date, then the Consent Solicitation may be concluded on that date and Preferred Holders would no longer be able to deliver a Consent. Such early conclusion of the Consent Solicitation would limit the right of such Preferred Holders to receive the Consent Fee, even if such Preferred Holders would otherwise have delivered Consents with respect to their Preferred Units prior to the Expiration Date.
The Consent Fee would be payable only if the Proposed Amendment becomes effective.
The Partnership Agreement shall havewill not pay a Consent Fee unless the powerProposed Amendment becomes effective by execution of the First Amendment by the Managing General Partner. As a result, even if a Preferred Holder provides its Consent on or prior to the Expiration Date and dutythe Partnership receives the Requisite Consents, if the Managing General Partner does not execute the First Amendment, no Consent Fee will be paid. This could be the case if the Merger Conditions are not satisfied or waived, as applicable, by the parties to (a) determine whether a nomination was madethe merger agreement or if the parties otherwise terminate the merger agreement in accordance with the above proceduresterms thereof.
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DESCRIPTION OF THE EQUITY INTERESTS IN THE PARTNERSHIP
For a complete description of the equity interests in the Partnership, you should refer to the Partnership Agreement, the Proposed Amendment as set forth in Annex A hereto, and (b) declare thatto the applicable provisions of Delaware law. For purposes of this section of this Consent Solicitation Statement, the term “Partnership Agreement” shall refer to the Partnership Agreement prior to the Effective Time, and the description of the Partnership Agreement contained in this section does not give effect to the Proposed Amendment. Upon the closing of the merger, the holders of Preferred Units electing to receive new ET Preferred Units will receive such nomination shall be disregardednew ET Preferred Units with terms reflecting the Proposed Amendment if any proposed nomination was not madethe Requisite Consents are obtained in complianceconnection with Section 13.4(b)this Consent Solicitation.
Common Units
Our Common Units represent limited partner interests in the Partnership. The holders of ourCommon Units are entitled to participate in Partnership distributions and exercise the rights or privileges available to limited partners under the Partnership Agreement.
IfNumber of Common Units
As of September 22, 2023, the Partnership had 105,096,104 Common Units outstanding, 75,537,671 of which are held by the public and 29,558,433 of which are held by affiliates of the Partnership.
Where the Common Units are Traded
The Partnership’s outstanding Common Units are listed on the NYSE under the symbol “CEQP.”
Cash Distributions
The Partnership Agreement requires that, within 45 days after the end of each quarter, the Partnership distribute all of its “Available Cash” to unitholders of record on the applicable record date.
Available cash for any quarter consists of all cash and cash equivalents of the Partnership, the Managing General Partner, Crestwood Midstream Partners LP and any subsidiary of any such entity, treated as a consolidated entity (the “Partnership Group”), on hand at the end of that quarter:
less, the amount of cash reserves that is necessary or appropriate in the reasonable discretion of the Managing General Partner to:
provide for the proper conduct of the business of the Partnership Group subsequent to such quarter;
comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any member of the Partnership Group is a party, or by which it is bound or its assets are subject; or
provide funds for future distributions to limited partner group (orpartners for any one or more of the next four quarters;
plus, all additional cash and cash equivalents of the Partnership Group on hand on the date of determination of Available Cash for the quarter resulting from working capital borrowings made subsequent to the end of the quarter. Working capital borrowings are generally borrowings that are made under a qualified representative of each member) does not appear at the annual meeting to present a nomination, such nomination shall be disregarded notwithstandingcredit facility or other similar arrangement and, in all cases, are used solely for working capital purposes;
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provided, however, that proxies in respect of such vote may have been receiveddisbursements made by the General Partner or the Partnership. To be considered a qualified representative of aany member of the Partnership Group or cash reserves established, increased or reduced after the end of such quarter but on or before the date of determination of Available Cash with respect to such quarter shall be deemed to have been made, established, increased or reduced, for purposes of determining Available Cash, within such quarter if the Managing General Partner so determines.
Notwithstanding the foregoing, Available Cash does not include any cash and cash equivalents on hand derived from or attributable to our ownership of, or sale or other disposition of, the shares of common stock of IPCH Acquisition Corp. and the membership interests of Crestwood Partners, LLC.
Transfer Agent and Registrar
Equiniti Trust Company, LLC (“Equiniti”) serves as the registrar and transfer agent for the Common Units. The Partnership will pay all fees charged by Equiniti for transfers of Common Units except for the following fees which must be paid by the holders of Common Units: surety bond premiums to replace lost or stolen certificates; taxes and other governmental charges; special charges for services requested by a holder of a Common Unit; and other similar fees or charges.
There is no charge to holders of Common Units for disbursements of the Partnership’s cash distributions.
Transfer of Common Units
Upon the transfer of a Common Unit in accordance with the Partnership Agreement, the transferee of the Common Unit will be admitted as a limited partner group, a person must be a duly authorized officer, manager or partner ofwith respect to the Common Units transferred when 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 partnerstransfer 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.
Board of Directors Informationadmission are reflected in our books and records. Each transferee:
Compensationrepresents that the transferee has the capacity, power, and authority to become bound by the Partnership Agreement;
automatically becomes bound by the terms and conditions of, Directorsand is deemed to have executed, the Partnership Agreement; and
Officers
gives the consents, waivers, and approvals contained in the Partnership Agreement.
In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a substituted limited partner in the Partnership for the transferred Common Units. A transferee will become a substituted limited partner of the Partnership for the transferred Common Units automatically upon the recording of the transfer on our books and records. Our Managing General Partner who also serve as directors, such as Mr. Phillips, do not receive additional compensation. Allwill cause any transfers to be recorded on our books and records no less frequently than quarterly.
Until a Common Unit has been transferred on our books, we and the transfer agent may treat the record holder of the non-employee directorsCommon Unit as the absolute owner for all purposes, except for Mr. Reaves receives cash compensationas otherwise required by law or stock exchange regulations.
We may, at our discretion, treat the nominee holder of $100,000 per year for serving ona Common Unit as the Board. absolute owner. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.
Common Units are securities, and any transfers of Common Units are subject to the laws governing the transfer of securities.
Preferred Units
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 compensationPreferred Units represent a separate class of $20,000 per year. In August 2022,our limited partner interests.
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Number Outstanding
As of September 22, 2023, there were 71,257,445 Preferred Units outstanding, which are convertible, as described below, into approximately 7,125,745 Common Units, with fractional units rounded to the Compensation Committee approved additional annual compensation in the amount of $10,000 be paid to any non-employee director that serves on threenearest whole unit.
Conversion
One or more board committees. All cash compensation is paidPreferred Holders may elect, each in its own discretion, (i) 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 forfeitconvert all or any portion of the restricted units that hasPreferred Units held by such unitholders, in an aggregate amount equaling or exceeding (a) a number of Preferred Units having an aggregate value of $20.0 million, which value is calculated by multiplying the number of Preferred Units to be converted by $9.1273 or (b) if the value of the Preferred Units (calculated in accordance with clause (a) above) to be converted by the unitholder requesting conversion does not previously vested, unless vesting is otherwise acceleratedequal or exceed $20.0 million, then all of the Preferred Units held by such unitholder, into Common Units, at ratio of 1 Common Unit for 10 Preferred Units, subject to adjustment from time to time (the “Conversion Ratio”), subject to the payment of any accrued but unpaid distributions to the date of such conversion and (ii) in the event of our voluntary liquidation, dissolution or winding up, to convert all or any portion of the Preferred Units held by such Preferred Holders into Common Units, at the discretionthen applicable Conversion Ratio, subject to payment of any accrued but unpaid distributions to the date of conversion.
At any time, subject to certain liquidity requirements set forth in the Partnership Agreement, if the volume-weighted average trading price of the Compensation Committee. common units on the national securities exchange on which the common units are then listed (the “VWAP Price”) for 20 trading days over the 30-trading day period ending on the close of trading on the day immediately preceding the date notice is given by the Partnership of election of its conversion right is greater than the quotient of (i) $13.69095 divided by (ii) the then applicable Conversion Ratio (or currently $136.9095), the Managing General Partner, in its sole discretion, may convert all or a portion of the outstanding Preferred Units into Common Units, at the then applicable Conversion Ratio, subject to the payment of any accrued but unpaid distributions to the date of conversion. Also, subject to certain liquidity requirements set forth in the Partnership Agreement, if the VWAP Price of the common units for 20 trading days over the 30-trading day period ending on the close of trading on the day immediately preceding the date notice is given by the Partnership of the exercise of its conversion right is greater than the quotient of (i) $9.1273 divided by (ii) the then applicable Conversion Ratio (or currently $91.273), the Managing General Partner, in its sole discretion, may convert all, but not less than all, of the outstanding Preferred Units into a number of Common Units equal to the Adjusted Conversion Amount (as defined in the Partnership Agreement).
Cash Distributions
Each Preferred Unit is entitled to a preferred cash distribution of $0.2111 per quarter, subject to certain adjustments (the “Distribution Amount”).
Such distributions are to be paid in cash at the Distribution Amount unless, subject to certain exceptions, (i) there is no distribution being paid on Parity Securities and Junior Securities (which include the Common Units) and (ii) the Partnership’s Available Cash, excluding any deductions to provide funds for distributions of Available Cash to holders of Common Units in respect of any one or more of the next four quarters, is insufficient to pay the distribution to Preferred Holders. If we fail to pay such distribution in full in cash for any quarter, then until such time as all accrued and unpaid distributions to Preferred Holders are paid in full in cash (i) the Distribution Amount will increase to $0.2567 per quarter and (ii) we will not be permitted to declare or make (a) any distributions in respect of any Junior Securities (including the Common Units) and (b) subject to certain exceptions, any distributions in respect of any Parity Securities.
If the director’s service relationship endsPartnership fails to pay in full any distribution to its Preferred Holders, the amount of such unpaid distribution will accrue and accumulate from the last day of the quarter for which such distribution is due until paid in full. Any accrued and unpaid distributions will increase at a rate of 2.8125% per quarter.
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The Partnership will not declare or make any distributions in respect of any Junior Securities (which include the Common Units) or any Parity Securities, subject to certain limited exceptions, unless and until all accrued and unpaid distributions on the Preferred Units have been paid in full in cash.
Rights upon a Change of Control
In the event of any transaction pursuant to which (i) the Managing General Partner or any affiliate of the director’s deathManaging General Partner exercises its rights to purchase all of the outstanding Common Units pursuant to the Partnership Agreement or Permanent Disability,(ii) any person or group of persons acquires in one or more series of related transactions all of the outstanding Common Units, in each case where the consideration received by the holders of Common Units is comprised of at least 90% cash (each, a “Cash COC Event”), the Preferred Holders shall convert the outstanding Preferred Units into Common Units immediately prior to the closing of such Cash COC Event at a conversion ratio equal to the greater of (i) the then applicable Conversion Ratio and (ii) the forfeiture restrictions lapse andquotient of (1) the award vests in full. Permanent Disability meansproduct of (a) $9.1273 multiplied by (b) 101%, divided by (2) the director’s inability, withVWAP Price of the Common Units for the 10 consecutive trading days ending immediately prior to the date of closing of the Cash COC Event, subject to a $10.00 per unit floor on Common Units received, subject to the payment of any accrued but unpaid distributions to the date of conversion.
Upon the occurrence of (a) the Common Units no longer being listed or without reasonable accommodation, by reason of illness, incapacity,admitted for trading on the NYSE or another national securities exchange, (b) any direct or indirect sale, lease, transfer, conveyance or other disability,disposition, in one or more series of related transactions, of all or substantially all of the properties or assets of the Partnership to perform hisany person or her duties, as determined by(c) any dissolution or liquidation of the Board for a cumulative total of 180 days in any 12-month period. Each non-employee director is reimbursed for out-of-pocket expensesPartnership (other than in connection with attending meetingsa bankruptcy proceeding or a statutory winding up) (any of the Boarditems (a) through (c), or committees.a Cash COC Event, a “Change of Control”), then each Preferred Holder shall, at its sole discretion:
The following table sets forth, for the year ended December 31, 2022, all compensation reportable for directors who served during 2022, as determined by SEC rules.
Director Compensation for 2022
Name | Fee Earned or Paid in Cash ($) | 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 |
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Voting
The Preferred Units have voting rights that are identical to the voting rights of the Common Units and shall vote with the Common Units as a single class, with each Preferred Unit being entitled to one vote for each Common Unit into which such Preferred Unit is convertible at the then-applicable Conversion Ratio, except that the Preferred Units (subject to certain exclusions) shall be entitled to vote as a separate class on any matter on which all unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferences of the Preferred Units in relation to the Partnership’s other securities or as required by law. Subject to certain
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exceptions, (i) if (a) the three largest Preferred Holders, together with all affiliates of such Preferred Holders that hold Preferred Units, collectively constitute at least two-thirds (2/3) of the outstanding Preferred Units and (b) GSO COF II Holdings Partners (Facility) LP and Magnetar Financial LLC, and each of their respective affiliates, collectively own at least 35% of the outstanding Preferred Units, then the approval of at least two-thirds (2/3) of the outstanding Preferred Units (subject to certain exclusions) shall be required to approve any matter for which the Preferred Holders are entitled to vote as a separate class, and otherwise, (ii) the approval of a majority of the outstanding Preferred Units (subject to certain exclusions) shall be required to approve any matter for which the Preferred Holders are entitled to vote as a separate class (each of (i) and (ii), a “Voting Threshold”).
A Change of Control in which consideration to be received by the holders of Common Units has a value of less than $10.00 per Common Unit requires approval of the Preferred Holders at the then-applicable Voting Threshold.
Transfer Agent and Registrar
Equiniti currently serves as transfer agent and registrar for the Preferred Units.
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PURPOSE OF THE CONSENT SOLICITATION
On August 16, 2023, the Partnership and Energy Transfer, among other parties, entered into the merger agreement, pursuant to which the Partnership will merge with and into Merger Sub, with Merger Sub surviving the merger as a direct wholly owned subsidiary of Energy Transfer. Pursuant to the merger agreement, the Partnership has agreed, at the request of Energy Transfer, to cooperate with Energy Transfer in respect of any plans of Energy Transfer to (a) commence one or more tender offers to purchase any or all of the outstanding Preferred Units prior to the closing of the merger for cash and (b) conduct one or more consent solicitations to obtain from the requisite holders of Preferred Units consent to certain amendments to the terms of the Preferred Units. In connection with the merger and at the direction of Energy Transfer, pursuant to the merger agreement, the Partnership and the Managing General Partner are soliciting Consents from the Preferred Holders to approve the amendment of the Partnership Agreement as set forth in the Proposed Amendment contained in Annex A to this Consent Solicitation Statement.
Reasons for the Consent Solicitation
The purpose of the Consent Solicitation is to (i) increase the cash redemption price for the Preferred Units in connection with a cash redemption election in the merger, and (ii) conform certain terms of the Preferred Units with Energy Transfer’s other outstanding series of preferred units in order to simplify Energy Transfer’s capital structure following the merger.
The Proposed Amendment is contained in Annex A and, if approved, would amend Section 5.8 of the Partnership Agreement as follows:
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Section 5.8(c)(i) of the Partnership Agreement provides that each Preferred Unit is entitled to share in any special distributions by the Partnership of cash, securities or other property pro rata with the Partnership’s Common Units as if the Preferred Units had converted into Common Units. Special distributions do not include regular quarterly distributions paid in the normal course pursuant to the Partnership Agreement, so long as such distributions are not in excess of 130% of the quarterly distribution rate for the prior quarter. The Proposed Amendment would provide Preferred Holders the right to receive (and share pro rata with holders of Common Units in) any portion of any quarterly cash distribution made in the normal course to holders of Common Units that is in excess of an amount that is the greater of (i) the amount of the highest previously paid quarterly cash distribution after the date of the merger and (ii) the amount equal to 115% of the quarterly cash distribution for the immediately preceding quarter; and |
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If the proposed amendment is approved by the requisite holders of Preferred Units, the consideration you may elect to receive in the merger, as a holder of Preferred Units, will be affected in the following ways: (a) if you elect to receive a new security of Energy Transfer, such security will have terms as reflected by the proposed amendment, and (b) if you make a redemption election, the cash redemption price will increase from $9.218573 to $9.857484 per Preferred Unit. We will announce the results of the consent solicitation as promptly as possible following the Expiration Date, which announcement is anticipated to be at least 10 days before the deadline to make a merger consideration election for your Preferred Units, assuming the Expiration Date is not extended.
Proposal 2 — Advisory Vote16
The Record Date is the close of business on September 22, 2023. This Consent Solicitation Statement is being sent to Approveall record holders of Preferred Units as of the Record Date. The Record Date has been fixed as the date for the determination of Preferred Holders entitled to give Consents pursuant to the Consent Solicitation. The Managing General Partner reserves the right to establish, from time to time, but in all cases prior to the Consent Effective Date, any new date as such Record Date with respect to the Preferred Units and, thereupon, any such new date will be deemed to be the Record Date for purposes of the Consent Solicitation. “Consent Effective Date” means 5:00 p.m., Eastern Time, on the date, if any, on which Requisite Consents shall have been received by the Tabulation Agent.
As of the Record Date, there were 71,257,445 outstanding Preferred Units. The Proposed Amendment will not become operative until after the satisfaction or waiver of the conditions to the Consent Solicitation, as applicable. These conditions include receipt of the Requisite Consents and the satisfaction or waiver, as applicable, of the Merger Conditions by the parties to the merger agreement and the merger agreement is not otherwise terminated. See “—Conditions to the Consent Solicitation.” The Managing General Partner reserves the right to amend the terms and conditions of the Consent Solicitation at any time prior to the Expiration Date for any reason, including, but not limited to, earlier concluding, extending and/or terminating the Consent Solicitation. If the Requisite Consents are received (and not revoked) at or prior to the Expiration Date, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, and the First Amendment is executed by the Managing General Partner, the amendments to the terms of the Preferred Units effected thereby will be binding on all Preferred Holders, including non-consenting Preferred Holders and their transferees. The delivery of a Consent will not affect a Preferred Holder’s right to sell or transfer Preferred Units, and a sale or transfer of any Preferred Units after the Record Date will not have the effect of revoking any Consent properly given by the registered holder of such Preferred Unit. Therefore, each properly executed and delivered Consent will be counted notwithstanding any sale or transfer of any Preferred Unit to which such Consent relates, unless the applicable registered holder has complied with the procedure for revoking Consents, as described herein.
The adoption of the Proposed Amendment requires the consent of the holders of at least two-thirds of the issued and outstanding Preferred Units. As of the Record Date, there were 71,257,445 Preferred Units issued and outstanding.
Conditions to the Consent Solicitation
The Consent Solicitation is conditioned upon, and the Proposed Amendment will not become effective unless and until, the Tabulation Agent has received the Requisite Consents and the Merger Conditions have been satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated.
General
This Consent Solicitation Statement is being sent to record holders of Preferred Units as of 5:00 p.m., Eastern Time, on September 22, 2023.
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This proposal, commonly known as a “say-on-pay” proposal, provides our unitholdersPreferred Holders who wish to consent to the Proposed Amendment must deliver their properly submitted Consent in accordance with the opportunityprocedures described below so that it is received by the Tabulation Agent on or before the Expiration Date.
Each Preferred Holder who delivers a Consent in accordance with the procedures set forth herein will be deemed to casthave validly consented to the Proposed Amendment.
All of the Preferred Units are held in book-entry form. Only registered holders of the Preferred Units are authorized to deliver Consents with respect to their Preferred Units. Therefore, to deliver a pass-through advisory voteConsent, the beneficial owner of Preferred Units must instruct its DTC Participant to deliver the Consents on the beneficial owner’s behalf according to the procedures described below. Consents should be delivered on a per unit basis, meaning Preferred Holders should deliver one Consent for each of their Preferred Units.
DTC has confirmed that the Consent Solicitation is eligible for DTC’s ATOP procedures. Accordingly, DTC Participants must electronically deliver a Consent by causing DTC to temporarily transfer and surrender their Preferred Units to the Information and Tabulation Agent in accordance with DTC’s ATOP (contra CUSIP) procedures. By making such transfer, DTC Participants will be deemed to have delivered a Consent with respect to any Preferred Units so transferred and surrendered. DTC will verify each temporary transfer and surrender and confirm the electronic delivery of such Consent by sending an Agent’s Message (as defined below) to the Information and Tabulation Agent.
The term “Agent’s Message” means a message transmitted by DTC and received by the Information and Tabulation Agent, which states that DTC has received an express acknowledgment from the DTC Participant delivering Consents that such DTC Participant (1) has received and agrees to be bound by the terms of the applicable Consent Solicitation as set forth in this Consent Solicitation Statement and that the Partnership may enforce such agreement against such DTC Participant and (2) consents to the Proposed Amendment as described in this Consent Solicitation Statement.
The Information and Tabulation Agent will establish a new ATOP account or utilize an existing account with respect to the Preferred Units at DTC (the “Book-Entry Transfer Facility”) promptly after the date of this Consent Solicitation Statement (to the extent that such arrangement has not already been made by the Information and Tabulation Agent), and any financial institution that is a participant in the Book-Entry Transfer Facility system and whose name appears on a security position listing as the owner of Preferred Units may make book-entry delivery of Preferred Units into the Information and Tabulation Agent’s account in accordance with the Book-Entry Transfer Facility’s procedures for such transfer. Delivery of documents to the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility does not constitute delivery to the Information and Tabulation Agent.
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CONSENTS MUST BE ELECTRONICALLY DELIVERED IN ACCORDANCE WITH DTC’S
ATOP PROCEDURES.
A beneficial owner of Preferred Units held through a broker, dealer, commercial bank, trust company, other nominee or DTC Participant must provide appropriate instructions to such person in order to cause a delivery of Consent through ATOP with respect to such Preferred Units.
Preferred Holders desiring to deliver their Consents prior to the applicable Expiration Date should note that they must allow sufficient time for completion of the ATOP procedures during the normal business hours of DTC on such respective date. Consents not delivered prior to the Expiration Date will be disregarded and of no effect.
The method of delivery of Consents through the ATOP procedures and any other required documents to the Information and Tabulation Agent is at the election and risk of the Preferred Holder, and delivery will be deemed made only when made through ATOP in accordance with the procedures described herein.
Deliveries of Consents or notices of revocation will not be deemed to have been made until such irregularities have been cured or waived. The Partnership’s interpretation of the terms and conditions of the Consent Solicitations (including this Consent Solicitation Statement) will be final and binding on all parties.
No consent form or letter of transmittal needs to be executed in relation to the Consent Solicitations or the Consents delivered through DTC. The valid electronic delivery of Consents through the temporary transfer and surrender of Preferred Units in accordance with DTC’s ATOP procedures shall constitute a written consent to the Consent Solicitation.
Preferred Holders should not tender or deliver their Preferred Units at any time.
The registered ownership of a Preferred Unit as of the Record Date shall be determined by Equiniti, as transfer agent and registrar of the Preferred Units. The ownership of Preferred Units held through DTC by DTC Participants shall be established by a DTC security position listing provided by DTC as of the Record Date.
Giving a Consent will not affect the Preferred Holder’s right to sell or transfer the Preferred Units. DTC will create escrow positions for each Preferred Holder who delivers a valid Consent to the Proposed Amendment prior to the Expiration Date, and who has not validly revoked such Consent, prior to the Consent Effective Date. The payment of any Consent Fee will be paid to the Preferred Holders who delivered valid Consents even if such Preferred Holder sells or transfers its Preferred Units prior to the Expiration Date. No Consent Fee will be paid with respect to any Preferred Units for which no Consent is delivered on or prior to the Expiration Date, even though the Proposed Amendment, if approved, will bind all holders of such Preferred Units and their transferees upon the effectiveness of the Proposed Amendment.
Determination of Validity
All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any delivered Consent pursuant to any of the procedures described above shall be determined by the Partnership, in its sole discretion (which determination shall be final and binding). The Partnership reserves the absolute right to reject any or all deliveries of any Consent determined by it not to be in proper form or the acceptance of which would, in the Partnership’s opinion, be unlawful. The Partnership also reserves the absolute right, in its sole discretion, to waive any defect or irregularity as to any delivery of any Consent of any particular Preferred Holder, regardless of whether similar defects or irregularities are waived in the case of other Preferred Holders. The Partnership’s interpretation of the terms and conditions of the Consent Solicitation shall be final and binding. Any defect or irregularity in connection with deliveries of Consents must be cured within such time as the Partnership determines, unless waived by the Partnership. Deliveries of Consents shall not be deemed to have been made until all defects and irregularities have been waived by the Partnership or cured. Neither the
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Partnership nor any other person shall be under any duty to give notification to any Preferred Holder of any defects or irregularities in deliveries of Consents or shall incur any liability for failure to give any such notification.
Expiration Date; Extensions; Amendment
The Expiration Date is October 17, 2023 at 5:00 p.m., Eastern Time. The Managing General Partner reserves the right (but is not obligated), in its sole discretion and subject to applicable law, at any time prior to the Expiration Date to (i) terminate the Consent Solicitation for any reason, including if the Requisite Consents have not been received or if the merger is terminated; (ii) earlier conclude the Consent Solicitation upon obtaining the Requisite Consent; or (iii) amend the terms of the Consent Solicitation (including to extend the Expiration Date). The Managing General Partner reserves the right (but is not obligated) to accept any Consent received by any other reasonable means or in any form that reasonably evidences the giving of consent to the approval of the compensationProposed Amendment.
Revocation of our named executive officers. We are asking unitholdersConsents
Prior to approve,the Consent Effective Date, any Preferred Holder may revoke any Consent given as to its Preferred Units or any portion of such Preferred Units. Only a Preferred Holder on an advisory basis, the compensationRecord Date may deliver a Consent or revoke any Consent previously delivered by such Preferred Holder. Any person or entity that becomes a holder of our named executive officers as disclosedthe Preferred Units after the Record Date will not have the authority to deliver a Consent to the Proposed Amendment or to revoke any Consent previously delivered by a Holder relating to the Preferred Units held by the subsequent holder. Preferred Holders who wish to exercise their right of revocation with respect to a Consent must give a properly transmitted “Requested Message” through ATOP, which must be received by the Tabulation Agent through ATOP, prior to the Consent Effective Date.
In order to be valid, a notice of revocation must specify the Preferred Holder in the Compensation Discussion and Analysis,Book-Entry Transfer Facility whose name appears on the Summary Compensation Table,security position listing as the owner of such Preferred Units and the related compensation tablesnumber of the Preferred Units with respect to which a Consent is to be revoked. Validly revoked Consents may be redelivered by following the procedures described elsewhere in this Consent Solicitation Statement at any time prior to the Expiration Date. Consents may not be revoked after the Consent Effective Date.
Also, if the Consent Solicitation is amended prior to the Expiration Date in a manner determined by the Partnership, in its sole discretion, to constitute a material change to the terms of the Consent Solicitation, the Partnership will promptly disseminate additional applicable Consent Solicitation materials and narrative.may (but is not required to) extend the Expiration Date for a period deemed by the Partnership to be adequate to permit Preferred Holders to consider such amendments and, if required by applicable law or in the Partnership’s sole discretion, extend the right of Preferred Holders to revoke or withdraw their Consents.
AsTo be effective, a notice of revocation must be in a format customarily used by DTC.
A revocation of a Consent may only be rescinded by the execution and delivery of a new Consent in accordance with the procedures set forth in this Consent Solicitation Statement. A Preferred Holder who has delivered a revocation at any time prior to the Consent Effective Date may thereafter deliver a new Consent until the Expiration Date in accordance with the procedures described in this Consent Solicitation Statement. A revocation to a Consent can only be accomplished in accordance with the Compensation Discussionforegoing procedures.
The Partnership intends to consult with the Information and Analysis sectionTabulation Agent to determine whether the Information and Tabulation Agent has received any revocations of Consents. The Partnership reserves the right to contest the validity of any revocation, and all questions as to the validity (including time of receipt) of any revocation will be determined by the Partnership in its sole discretion, which determination will be conclusive and binding.
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A revocation of the Consent will be effective only as to the Preferred Units listed on the revocation and only if such revocation complies with the provisions of this ProxyConsent Solicitation Statement. Only a Preferred Holder of record is entitled to revoke a Consent previously given. A beneficial owner of the Preferred Units must arrange with its broker, dealer, commercial bank, trust company or other nominee company to execute and deliver on its behalf a revocation of any Consent already given with respect to such Preferred Units.
If the Requisite Consents are received by the Tabulation Agent through ATOP (and not revoked) at or prior to the Expiration Date and the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, then the Partnership will, as promptly as practicable after, and only if, the Merger Conditions are satisfied or waived, as applicable, by the parties to the merger agreement and the merger agreement is not otherwise terminated, pay to the Consenting Holders from whom properly submitted Consents are received by the Tabulation Agent on or prior to the Expiration Date a Consent Fee equal to $0.182546 for each Preferred Unit with respect to which consents are received (and not revoked) on or prior to the Expiration Date. No Consent Fee will be paid with respect to any Preferred Units for which no Consent is delivered on or prior to the Expiration Date, even though the Proposed Amendment, if approved, will bind all holders of such Preferred Units and their transferees upon the effectiveness of the Proposed Amendment.
Expected U.S. Federal Income Tax Consequences to Preferred Holders upon Receipt of the Consent Fee
This discussion of the expected U.S. federal income tax consequences to Preferred Holders upon the receipt of the Consent Fee is focused solely on Preferred Holders who are individual citizens or residents of the United States (for U.S. federal income tax purposes) that hold their preferred units as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment) (“U.S. holders”). This discussion does not address any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction or any U.S. federal laws other than income tax laws (such as estate or gift tax laws) and does not address the net investment income tax. The Partnership has not sought a ruling from the Internal Revenue Service (“IRS”) with respect to such tax consequences, and the IRS is not precluded from taking positions contrary to those described herein.
The Partnership intends to report the Consent Fee as ordinary income paid to U.S. holders as consideration for their Consents.
Information reporting requirements may apply to the Consent Fee paid to a U.S. holder. A U.S. holder may also be subject to backup withholding (currently at the rate of 24%) with respect to the Consent Fee unless the U.S. holder is (i) a corporation or other exempt recipient and, when required, establishes this exemption or (ii) provides its correct taxpayer identification number, certifies that it is not currently subject to backup withholding tax and otherwise complies with applicable requirements of the backup withholding tax rules. A U.S. holder that does not provide its correct taxpayer identification number may be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder can be refunded or credited against the U.S. holder’s U.S. federal income tax liability, if any, provided that the required information is furnished to the IRS in a timely manner.
Information and Tabulation Agent
The Partnership has appointed D.F. King & Co., Inc. as Information and Tabulation Agent for the Consent Solicitation to, among other things, receive, tabulate and verify Consents. All correspondence sent to the Information and Tabulation Agent should be directed to the address set forth on the back cover of this Consent Solicitation Statement. The Partnership has agreed to indemnify the Information and Tabulation Agent for certain
liabilities, including liabilities under the federal securities laws. D.F. King & Co., Inc. has agreed to facilitate the Consent Solicitations; however, the Partnership is solely responsible for the information contained in the Consent Solicitation materials. The Information and Tabulation Agent makes no recommendation as to whether Preferred Holders should deliver Consents in response to the Consent Solicitation.
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Requests for additional copies of and questions relating to the Consent Solicitation Statement, the Compensation Committee has structured our executive compensation programPartnership Agreement, and the documents incorporated by reference into this Consent Solicitation Statement may be directed to tie total compensationthe Information and Tabulation Agent at the address and telephone number set forth on the back cover of this Consent Solicitation Statement. Holders of the Preferred Units may also contact their broker, dealer, commercial bank, trust company, other nominee or DTC Participant for assistance concerning the Consent Solicitation.
In connection with the Consent Solicitation, directors, officers and regular employees of the Partnership (who will not be specifically compensated for such services) may solicit Consents by use of the mails, personally or by telephone, facsimile or other means.
Energy Transfer will pay the Information and Tabulation Agent reasonable and customary fees for its services and will reimburse it for its reasonable and documented expenses in connection those services. Energy Transfer will also reimburse brokers and dealers for customary mailing and handling expenses incurred by them in forwarding copies of this Consent Solicitation Statement and related documents to long-term performance that supports unitholder value, as reflected primarily in our common unit price.the beneficial owners of the Preferred Units.
We believe our compensation philosophy has served our employees and unitholders well. In 2022,have entered into a solicitation agent agreement with BofA Securities, Inc. (“BofA Securities”), pursuant to which BofA Securities will act as part of our corporate governance engagement with our unitholders, including both large and small investors, we met with representatives of unitholders owning over 40% of our common units. During these meetings, unitholders expressed no concernsSolicitation Agent in connection with the mannerConsent Solicitation. The Solicitation Agent may contact you regarding the Consent Solicitation and may request brokers, dealers and other nominees to forward this Consent Solicitation Statement and related materials to beneficial owners of the Preferred Units. We have agreed to pay the Solicitation Agent customary fees and to reimburse the Solicitation Agent for its reasonable out-of-pocket expenses in which our executive compensation program operates.connection with its services. We also have agreed to indemnify the Solicitation Agent and its affiliates against certain liabilities in connection with its services.
We urge unitholders to read the Compensation DiscussionBofA Securities and Analysis,its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. At any given time, the Summary Compensation TableSolicitation Agent and related compensation tablesits affiliates may trade the securities or other debt or equity securities of the Partnership or its affiliates for its own account or for the accounts of its customers and, narrative, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board believe that the policies and procedures articulatedaccordingly, may hold a long or short position in the Compensation DiscussionPreferred Units or other such securities. The Solicitation Agent and Analysisits affiliates have provided in the past, and are effectivecurrently providing, other investment banking and financial advisory services to the Partnership, for which they have received or will receive customary compensation, as applicable. The Solicitation Agent and its affiliates may in achieving our goalsthe future provide various investment banking and thatother services to the compensation of our named executive officers has supported and contributed to our success.Partnership, for which they would receive customary compensation.
The Board of Directors recommends thatSolicitation Agent does not assume any responsibility for the unitholders vote in favoraccuracy or completeness of the following resolution:information contained in this Consent Solicitation Statement or for any failure by the Partnership to disclose events that may have occurred and may affect the significance or accuracy of such information.
“RESOLVED,Retail Soliciting Fee
The Partnership will pay Retail Soliciting Dealers retail soliciting fees. Each Retail Soliciting Dealer that successfully delivers Consents from a retail beneficial owner of the compensationPreferred Units will be eligible to receive the Retail Soliciting Fee from the Partnership equal to $0.0456365 per Preferred Unit for which a Consent is validly delivered and not revoked by or on behalf of such retail beneficial owner, except for any Preferred Units for which Consents are delivered by a Retail Soliciting Dealer for its own account. The Retail Soliciting Fee will only be paid to the named executive officers, as disclosed pursuant to Item 402each Retail Soliciting Dealer in respect of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”
Although this advisory vote is not binding, the Compensation Committee will consider the voting results when evaluating our executive compensation program.beneficial owners who deliver Consents in respect of Preferred Units in an aggregate amount of 25,000 Preferred Units or fewer.
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Preferred Holders are not entitled to rights of an objecting unitholder or appraisal rights under Delaware law in connection with the Proposed Amendment or this Consent Solicitation.
The entire cost of this Consent Solicitation will be borne by Energy Transfer. We will request brokerage houses, nominees, custodians, fiduciaries, and other like parties to forward this Consent Solicitation Statement to the beneficial owners of the Preferred Units held of record by them, and Energy Transfer will reimburse such persons for out-of-pocket expenses incurred in forwarding such materials.
Beneficial Ownership of Shares23
TheTo our knowledge, the following table sets forth certain information regarding the beneficial ownership of our common unitsCommon Units and preferred unitsPreferred Units as of March 15,the close of business on September 22, 2023 (except as otherwise indicated) by (i)noted in the footnotes below) and with respect to: (1) each person or entity known by us to beneficially own 5% or more than 5%of the outstanding Common Units and Preferred Units; (2) each member of the Board; (3) each of our common units or preferred units, (ii) eachnamed executive officers; and (4) the members of the executive officers of the General Partner, (iii) each of the directors of the General Partner,Board and (iv) all directors andour current executive officers as a group. Except as otherwise indicated, and subject to any interests
Beneficial ownership is determined in accordance with the rules of the reporting person’s spouse, we believe thatSEC and generally includes voting or dispositive power with respect to securities. To our knowledge, except as indicated in the beneficial owners of common units listed below, based on information furnished by such owners,footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to such common units. Asall Common Units shown as beneficially owned by them. Percentage of March 15, 2023, we had 105,354,037 common units outstandingclass amounts are based on 105,096,104 Common Units and 71,257,445 preferred units outstanding.
Name of Beneficial Owner(1) | Amount and Nature of Common Unit Beneficial Ownership(2) | Percent of Common Units Owned | Amount and Nature of Preferred Unit Beneficial Ownership(3) | Percent of Preferred Units Owned | ||||||||||||||||
ALPS Advisors, Inc.(4) | 12,335,027 | 11.8 | % | — | — | |||||||||||||||
FR XIII Crestwood Permian Basin Holdings LLC(5) | 11,257,436 | 10.8 | % | — | — | |||||||||||||||
CIBC Private Wealth Group, LLC(6) | — | — | 9,755,026 | 13.7 | % | |||||||||||||||
Diaco Aviki | 138,056 | * | — | — | ||||||||||||||||
John Black | 93,849 | * | — | — | ||||||||||||||||
Steven M. Dougherty | 396,802 | * | — | — | ||||||||||||||||
Warren H. Gfeller | 65,964 | * | — | — | ||||||||||||||||
Robert T. Halpin | 550,839 | * | — | — | ||||||||||||||||
Janeen S. Judah | 21,879 | * | — | — | ||||||||||||||||
Joel C. Lambert | 346,024 | * | — | — | ||||||||||||||||
David Lumpkins | 55,571 | * | — | — | ||||||||||||||||
Angela A. Minas | 8,186 | * | — | — | ||||||||||||||||
William H. Moore | 238,534 | * | — | — | ||||||||||||||||
Robert G. Phillips | 1,166,169 | 1.11 | % | — | — | |||||||||||||||
Gary D. Reaves | 8,065 | * | — | — | ||||||||||||||||
John J. Sherman | 3,245,463 | 3.08 | % | — | — | |||||||||||||||
Frances M. Vallejo | 13,981 | * | — | — | ||||||||||||||||
Clay C. Williams | 8,186 | * | — | — | ||||||||||||||||
Directors and executive officers as a group (15 persons) | 6,357,568 | 5.14 | % | — | — |
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Sustainability and ESG
At Crestwood, sustainability means operating in an ethically, environmentally and socially responsible manner, focusing on safety, respecting and supporting our communities, protecting the environment, and developing our employees.
In January 2022, we published our second three-year sustainability strategy which outlines the focus areas for our ESG/sustainability initiatives that will continue to drive our performance, create impact and maintain our MLP ESG midstream leadership position. The development of our 2022-2024 sustainability strategy is a result of our materiality assessment update, which includes input from key stakeholders and investors.
Our second sustainability strategy focuses on Supply Chain Management, Transparency and Disclosure, Biodiversity & Ecosystem Protection, Carbon Management, Diversity, Equity & Inclusion and Indigenous Relations.
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Sustainability and ESG
Sustainability Strategy Highlights in 2022
In 2022, Crestwood made significant strides in the first year of its 2022-2024 sustainability strategy.
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Sustainability and ESG
Carbon Management Plan
Carbon management is a leading component of our three-year sustainability strategy. Published in January 2022, our carbon management plan outlines near-term emissions reduction activities that we intend to implement and highlights not only a series of commitments, but also the mechanisms for achievement of those commitments as we continue to expand our leading Gathering and Processing asset portfolio. In 2022, we made significant strides in executing upon key deliverables outlined in the carbon management plan.
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Methane Emissions Monitoring |
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Sustainability and ESG
Recognized as an ESG Leader – Highly rated by multiple agencies
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Our Sustainability Disclosure
Crestwood provides its stakeholders with transparent reporting on ESG performance. Our 2021 Sustainability Report — our 4th annual — follows best practices in sustainability reporting and provides detailed disclosure of our ESG performance. Our sustainability reporting is in accordance with the following frameworks:
Our 2022 sustainability report is on track for an early June 2023 issuance.
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Disclaimer: Crestwood’s sustainability report is not incorporated by reference into this proxy statement.
A Focus on Sustainability and ESG Performance
Crestwood’s ESG Journey: 2018-2022
While we have always had ESG ingrained in our values, Crestwood formalized its ESG governance framework in September 2018, which included establishing a Sustainability Committee and dedicated ESG function to provide oversight and integrate sustainability further into the organization.
Sustainability and ESG
Human Capital Management
Crestwood knows that it is crucial that we continue to attract and retain talent.Through our diverse and inclusive workplace, our comprehensive compensation and benefits, our career management, and our focus on health, safety and employee wellbeing, we strive to holistically support our employees.
Our innovation stems from the diverse perspectives, knowledge, and experiences of our employees. We strive to create an inclusive workplace where all employees are treated with dignity and respect. Our commitment to Diversity, Equity and Inclusion (DEI) starts at the top with a highly skilled and diverse Board. Of our directors, 33% are female. As of December 31, 2022, of our 753 employees, women represented 31% of Crestwood’s full-time females in management and 21% of full-time employees. Our Sustainability Committee at the board-level has oversight of our DEI programs.
Sustainability and ESG
Diversity, Equity and Inclusion Key Highlights
In 2022, and continuing into 2023, we have committed to furthering DEI at Crestwood.
Highlights include:
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Executive Compensation
Compensation Discussion and Analysis
Introduction
We do not directly employ any of the persons responsible for managing the Partnership. The General Partner currently manages our operations and activities, and its board of directors (i.e. the Board) and officers make decisions on our behalf. The compensation of the directors and the executive officers of the General Partner is determined by the Board based on the recommendations112,221,849 outstanding voting units, which, as of our Compensation Committee.
All of the executive officers of the Partnership also serve in the same capacities as executive officers of the Partnership’s subsidiaries and the compensation of the named executive officers (“NEOs”) discussed below reflects total compensation for services to all Crestwood entities described in more detail below.
For purposes of this Compensation Discussion and Analysis our NEOs for Fiscal 2022 were comprised of:
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Compensation Philosophy and Objectives
We employ a compensation philosophy that emphasizes pay for performance. The primary measure of our long-term performanceSeptember 22, 2023, is total shareholder return (TSR). We believe that by tying a substantial portion of each NEO’s total compensation to financial, operational and safety performance metrics that support TSR, our pay-for-performance approach aligns the interests of our executive officers with that of our unitholders. Accordingly, the objectives of our total compensation program consist of:
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By accomplishing these objectives, we intend to optimize long-term unitholder value.
Executive Compensation
Recent Developments
In 2022 the Compensation Committee conduced a comprehensive review of our compensation program to identify areas of focus to better align our compensation program with the long-term interests of our unitholders. Based on that review, the Compensation Committee took the following actions:
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Compensation Setting Process
Performance Evaluation
For the CEO, in Fiscal 2022, the Board met in executive session without management present to review the CEO’s performance in the areas of financial results, operational safety and efficiency, progress against ESG and sustainability goals, and leadership team development, among other areas of focus designed to align with increasing long-term unitholder value. In this session, the Board also reviewed:
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The Compensation Committee used these evaluations and competitive market data to determine the CEO’s compensation. For all NEOs except the CEO, the Compensation Committee reviewed the CEO’s recommendations, including supporting market data, and individual performance assessments. In addition, the Compensation Committee reviewed the reasonableness of the CEO’s pay recommendations for NEOs based on a competitive market study that included proxy and annual report data from the approved comparator peer group and published compensation survey data (discussed further below). Based on this input, the Compensation Committee determined compensation for the other NEOs. The Board then reviewed and ratified all aspects of executive compensation based on the reports and recommendations from the Compensation Committee.
Role of CEO and Management
In setting compensation, the Board and the Compensation Committee rely on the CEO and management for certain inputs into its process. Our compensation consultant provides the
Executive Compensation
compensation committee and the CEO with data from the annual proxy statements and annual reports of companies in our comparator peer group, along with pay information compiled from nationally recognized executive and industry-related compensation surveys. Our CEO and compensation consultant then use this data to analyze pay practices among companies in the comparator peer group in order to assist the Compensation Committee in its assessment the market as a whole. The CEO also:
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Our CEO makes recommendations to the Compensation Committee with respect to financial metrics to be used and determination of performance for performance-based awards. He also makes recommendations regarding non-CEO executive compensation, which may be based on our performance, individual performance and the peer group compensation market analysis. The Compensation Committee considers these recommendations when establishing the total compensation packages of our executive officers.
Role of the Compensation Consultant
Willis Towers Watson serves as our third-party compensation consultant. Our Compensation Committee believes it is beneficial to have a third-party analysis to assist in evaluating and setting executive compensation. The Compensation Committee, in consultation with management, chose Willis Towers Watson based on its extensive experience in providing executive compensation advice, including specific experience in the oil and gas industry. For Fiscal 2022, Willis Towers Watson provided the Compensation Committee with an analysis of our executive compensation programs, including total direct compensation comprised of base salary, annual incentive and long-term incentive compensation, in order to assess the competitiveness of our programs and to provide conclusions and recommendations. Our Compensation Committee has taken and will take into consideration the discussions, guidance and compensation studies produced by our compensation consultant to make compensation decisions. The Compensation Committee has assessed the independence of the compensation consultant and has concluded that the compensation consultant’s work for the Compensation Committee does not raise any conflict of interest.
Competitive Benchmarking and Peer Group
Our Compensation Committee considers competitive industry data in making executive pay determinations. Pursuant to our Compensation Committee’s decisions to maintain a peer group for executive compensation purposes and in view of evolving industry and competitive conditions, Willis Towers Watson, with the assistance of management, proposed certain peer group companies for our Compensation Committee’s review.
Executive Compensation
After discussion with Willis Towers Watson and reviewing its recommendation of a peer group based on companies with annual revenues, assets and net income similar to ours and taking into account geographic footprint and employee count, our Compensation Committee determined that the peer group listed below was the most appropriate for purposes of the 2022 executive compensation analysis.
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Willis Towers Watson compiled compensation data for the peer group from a variety of sources, including proxy statements and other publicly filed documents, and compiled published survey compensation data from multiple sources. This compensation data was then presented to the Compensation Committee and used to compare the compensation of our NEOs to our peer group where the peer group had individuals serving in similar positions and to the market. The Compensation Committee generally strives to maintain target base salary and short-term incentives in the range of the 50th percentile of market. Provided management maintains a high level of performance, executes well against Partnership goals, and creates long term value for unitholders, the Compensation Committee targets expected long-term incentive opportunities in the range of the 75th percentile of market.
Components of Compensation
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Executive Compensation
Base Salary
Base salary is designed to compensate executives commensurate with the level of the position they hold and for sustained individual performance (including experience, scope of responsibility, results achieved and potential). Base salaries for our NEOs are reviewed on an annual basis and at the time of promotion or other change in responsibilities. In determining the amount of any adjustments, the Compensation Committee uses market data as a tool for assessing the reasonableness of the base salary amounts of the NEOs as compared to the compensation of executives in similar positions with similar responsibility levels in our industry. However, the final determination of base salary amounts was within the Compensation Committee’s discretion. The annual base salaries for our NEOs are as follows: Mr. Phillips ($800,000), Mr. Halpin ($600,000), Mr. Black ($400,000), Mr. Dougherty ($450,000), Mr. Lambert ($470,000) and Mr. Moore ($425,000).
In connection with Mr. Black’s promotion to Executive Vice President, Chief Financial Officer in August 2022, his base salary was increased from $360,000 to $400,000. This amount was determined by reviewing the market data for comparable executive officer roles at our peer companies.
For 2023 the Compensation Committee accepted management’s recommendation to make no other changes to the NEOs base salary.
Annual Incentive Awards
Incentive bonuses are granted based on a percentage of each NEO’s base salary. Incentive awards are designed to reward the performance of key employees, including the NEOs, by providing annual incentive opportunities for the Partnership’s achievement of its annual financial, operational, and individual performance goals. These bonus awards are provided to the NEOs in order to provide competitive incentives to these individuals who can significantly impact performance and promote achievement of our short-term business objectives.
Executive Compensation
The annual target bonus amounts of our NEOs are reviewed on an annual basis and at the time of promotion or other change in responsibilities. In determining the amount of any adjustments, the Compensation Committee uses market data as a tool for assessing the reasonableness of the annual incentive targets of the NEOs as compared to executives in similar positions with similar responsibility levels in our industry. However, the final determination of annual target bonus amounts is within the Compensation Committee’s discretion.
($ in millions) | 2022 Target | 2022 Actuals | Percentage Achieved | Weight | Weighted Achievement | ||||||||||||||||||||
Consolidated Distributable Cash Flow per Common Unit | $ | 5.50 | $ | 4.63 | 85 | % | 30 | % | 26 | % | |||||||||||||||
Consolidated Adjusted EBITDA | $ | 805 | $ | 762 | 58 | % | 30 | % | 17 | % | |||||||||||||||
Total Shareholder Return Relative to Peers | 100 | % | 27 | % | 27 | % | 10 | % | 3 | % | |||||||||||||||
Safety |
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Total Recordable Incident Rate | 1.10 | 1.03 | 107 | % | 4 | % | 4 | % | |||||||||||||||||
Days Away Restricted Transferred Rate | 0.75 | 0.51 | 132 | % | 4 | % | 5 | % | |||||||||||||||||
Preventable Vehicle Incident Rate | 1.25 | 0.89 | 129 | % | 4 | % | 5 | % | |||||||||||||||||
Safety and Compliance Leading Indicators |
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Near Miss Reports | 1,300 | 2,235 | 140 | % | 4 | % | 6 | % | |||||||||||||||||
Safety, Ethics, HR, IT Training Completed On-Time | 99.5 | % | 100.0 | % | 140 | % | 4 | % | 6 | % | |||||||||||||||
Sustainability |
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Methane Emissions Intensity (metric Tons per Mscf throughput) | 0.046 | % | 0.042 | % | 110 | % | 2 | % | 2 | % | |||||||||||||||
LDAR Conducted for Facilities with Methane Emission Sources | 75 | % | 100 | % | 140 | % | 2 | % | 3 | % | |||||||||||||||
Indigenous Cultural Awareness Training Completed | 99 | % | 100 | % | 140 | % | 2 | % | 3 | % | |||||||||||||||
D&I Representation in Scholarship and Internship Program | 60 | % | 60 | % | 100 | % | 2 | % | 2 | % | |||||||||||||||
Community Engagement—Volunteer Hours | 2,000 | 2,847 | 140 | % | 2 | % | 3 | % | |||||||||||||||||
Total Achievement | 100 | % |
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Actual annual incentive awards for 2022 were determined based on our achievement of Compensation Committee approved key performance indicators (“KPIs”) and a board discretionary component. The KPIs for Fiscal 2022 were distributable cash flow per common unit, adjusted EBITDA, total shareholder return relative to peers, safety, and sustainability. Each KPI is then weighted based on the relative impact to our overall compensation philosophy and objectives. Actual results between the minimum and maximum target thresholds are pro-rated based on the percentage of target reached. Actual results above the maximum threshold are capped at 140% and results below 40% achievement result in 0% achievement for that KPI, excluding total unitholder return relative to peers.
Based on the company’s KPI achievement, the annual incentive bonus pool for Fiscal 2022 was calculated at 85% of target.
Executive Compensation
Individual Performance
Historically, after adjustments for KPI achievement, the actual bonus amount paid to the individual NEO is then further adjusted based on the individual performance review for such NEO. While 2022 was a year of exceptional strategic achievement, our 2022 financial and operating results, at 85% of target KPIs, were below plan and investor expectations due to a wide range of factors. Accordingly, the Compensation Committee accepted management’s recommendation that, except for William Moore, the NEOs’ annual incentive payouts, relative to target bonus, should not exceed the plan achievement of 85%. Mr. Moore’s incentive multiplier was 110% of target due to his leadership in realigning our midstream portfolio by expanding our operations in the Williston and Delaware Basins, while divesting our non-core Barnett and Marcellus assets.
Some of the factors that impact an individual performance review of an NEO include: (i) whether or not we achieved the goals established for the year and any notable shortfalls relative to expectations; (ii) the level of difficulty associated with achieving such objectives based on the opportunities and challenges encountered during the year; (iii) current year operating and financial performance relative to both public guidance and prior year’s performance; (iv) significant transactions or accomplishments for the period not included in the goals for the year; (v) our relative prospects at the end of the year with respect to future growth and performance; and (vi) our equity price performance and returns during the year and our positioning at the end of the year with respect to our targeted leverage metrics and credit profile.
During 2022, the executive leadership team successfully led the organization through a very challenging and unprecedented year and worked closely to achieve the vast majority of the goals set at the beginning of the year.
The 2022 annual incentive cash payouts were as follows:
Name | 2022 Base Salary ($) | Target Bonus (%) | Target Bonus ($) | Percentage Multiplier | Total ($) | ||||||||||||||||||||
Robert G. Phillips | 800,000 | 125 | % | 1,000,000 | 85 | % | 850,000 | ||||||||||||||||||
Robert T. Halpin | 600,000 | 120 | % | 720,000 | 85 | % | 612,000 | ||||||||||||||||||
John W. Black | 400,000 | 90 | % | 360,000 | 85 | % | 306,000 | ||||||||||||||||||
William H. Moore | 425,000 | 100 | % | 425,000 | 110 | % | 467,500 | ||||||||||||||||||
Steven M. Dougherty | 450,000 | 90 | % | 405,000 | 85 | % | 344,250 | ||||||||||||||||||
Joel C. Lambert | 470,000 | 90 | % | 423,000 | 85 | % | 359,550 |
Long-Term Incentive Plan Awards
Long-term incentive awards for the NEOs are granted under the Crestwood Equity Partners LP 2018 Long-Term Incentive Plan (LTIP) to promote achievement of our primary long-term strategic business objective of increasing TSR. This plan was designed to align the economic interests of key employees and directors with those of our unitholders and to provide an incentive to management for continuous employment with the Partnership. Long-term incentive compensation is based upon the common units representing limited partnership interests in us. For Fiscal 2022, awards under the LTIP consisted of: (i) the standard annual grant of restricted units and (ii) performance unit awards.
Annual Restricted Unit Awards
The initial annual long-term equity incentive targets for our NEOs were established in their Employment Agreements. For a more detailed description of the Executive Employment Agreements, see “Narrative Disclosure to Summary Compensation and Grants of Plan-Based Awards Table — Employment Agreements” in this proxy statement. The annual target long-term equity incentives for our NEOs are reviewed on an annual basis and at the time of promotion or
Executive Compensation
other changes in responsibilities. In determining the amount of any adjustments, the Compensation Committee uses market data as a tool for assessing the reasonableness of long-term incentive targets of the NEOs as compared to executives in similar positions with similar responsibility levels in our industry. However, the final determination of long-term equity awards is within the Compensation Committee’s discretion. The following annual restricted unit awards were made to our NEOs in 2022:
Name | Target Equity Percentage of Base Salary | 2022 Annual Restricted Units Awarded(1)(2) | Value at Grant Date ($) | ||||||||||||
Robert G. Phillips | 400 | % | 115,984 | 3,235,954 | |||||||||||
Robert T. Halpin | 275 | % | 59,804 | 1,668,532 | |||||||||||
John W. Black(3) | 150 | % | 18,757 | 523,320 | |||||||||||
William H. Moore | 225 | % | 34,659 | 966,986 | |||||||||||
Steven M. Dougherty | 260 | % | 42,407 | 1,183,155 | |||||||||||
Joel C. Lambert | 250 | % | 42,588 | 1,188,205 |
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Performance Units
In addition to the annual restricted unit grants, our NEOs are eligible to receive performance unit awards. In Fiscal 2022, each of our NEOs received a grant of performance units. These performance units vest over a three-year performance period and are paid out based on a performance multiplier ranging between 50% and 200%, with the determination based on the actual performance in the third year of the performance period compared to pre-established performance goals. The performance goals were based on achieving a specified level of adjusted EBITDA, distributable cash flow per unit, and three-year relative total shareholder return, based on the Partnership’s percentile ranking as compared with companies that are contained in the Alerian MLP Index at the time the goals were set. The Compensation Committee selected these metrics because we believe these are the key value indicators for our unitholders and will most closely align the interests of our NEOs with those of our unitholders. The Compensation Committee then weighted the three performance measures as follows:
Performance Unit Metric | Weighting | 50% Payout | 100% Payout | 200% Payout | ||||||||||||||||
Adjusted EBITDA | 35% | $805 | $885 | $965 | ||||||||||||||||
Distributable Cash Flow per Unit | 35% | $5.65 | $6.00 | $6.35 | ||||||||||||||||
Total Unitholder Return | 30% | ≥ 25th Percentile | ≥ 50th Percentile | ≥ 75th Percentile |
For all performance unit grants, the last year of the respective performance period is used to measure whether the performance goal is achieved. The payout multiplier for performance equal to or greater than the threshold is determined on a linear scale between performance levels. The Compensation Committee has the discretion to revise the performance unit metrics based on any mergers, acquisitions, or divestitures that occur during the performance period.
In making the 2022 performance unit grants to our NEOs, the Compensation Committee considered peer benchmarking data specific to each NEO and each NEO’s contribution to our long-term growth.
Executive Compensation
Based on this analysis, the Compensation Committee approved the following grants of performance units to our named executive officers on December 10, 2021:
Name | Performance Units | Value at Grant Date ($) | ||||||||||||||||||
Minimum (#) | Target (#) | Maximum (#) | ||||||||||||||||||
Robert G. Phillips | 32,751 | 65,502 | 131,004 | 2,052,040 | ||||||||||||||||
Robert T. Halpin | 10,008 | 20,015 | 40,030 | 627,035 | ||||||||||||||||
John W. Black | 1,883 | 3,766 | 7,532 | 117,983 | ||||||||||||||||
William H. Moore | 10,440 | 20,879 | 41,758 | 654,100 | ||||||||||||||||
Steven M. Dougherty | 6,141 | 12,282 | 24,564 | 384,775 | ||||||||||||||||
Joel C. Lambert | 9,553 | 19,105 | 38,210 | 598,527 |
The performance units are entitled to partnership distributions in the same amount that would be payable to the holder of common units. However, distributions paid on performance units are paid in additional performance units in lieu of cash and such additional performance units are subject to the same performance, vesting and forfeiture provisions as the original performance units. For performance units granted in 2022, the value of the distributions is converted into units each quarter based on the closing price of CEQP units on the payment date.
For its performance unit awards made in February 2023, the Compensation Committee set performance unit metrics at distributable cash flow per unit (35% weighting), total unitholder return (40% weighting), and debt to EBITDA leverage ratio (25% weighting). The Compensation Committee also set the CEO’s long-term incentive award to 50% performance units and 50% restricted units. The Compensation Committee expects to adjust the mix of long-term incentive plan awards to the same 50% performance unit mix for the remainder of the NEOs over the next few years.
Other Compensation Related Matters
Benefits & Perquisites
We offer a variety of health and welfare and retirement programs to all eligible employees. The NEOs are eligible for these programs on the same basis as other employees. We maintain a 401(k) retirement plan that provides eligible employees with an opportunity to save for retirement on a tax advantaged basis. We match 6% of the deferral to the retirement plan (not to exceed the maximum amount permitted by law) made by eligible participants. Our named executive officers are also eligible to participate in additional employee benefits available to our other employees.
We do not provide significant perquisites or other personal benefits to the NEOs beyond incidental, personal use of the corporate aircraft and, for the CEO only, certain membership dues for business purposes only.
Crestwood maintains a corporate aircraft that is used primarily for business travel by our executive officers. We have a written policy that sets forth guidelines and procedures regarding personal use of this aircraft. With respect to the Summary Compensation Table, Crestwood values the cost of the benefit at the incremental cost to Crestwood of providing such benefits. The primary purpose of Crestwood’s corporate aircraft is for business and, as a result, the incremental costs associated with personal use of such items does not include fixed costs that do not change based on usage, including limited family accompaniment or use in connection with an executive’s business use. To the extent we do not incur any incremental costs, no additional compensation is included as part of the total compensation of our named executive officers. However, any incremental costs that we do incur and that are incidental to the business use of such items are included in such total. In the case of personal use of corporate aircraft (including, for example, for travel to outside board
Executive Compensation
meetings), the amount reported is the incremental cost of providing the benefit, which primarily includes fuel costs and airport costs as well as any incidental costs for the crew.
Tax Considerations
With respect to the deduction limitations under Section 162(m) of the Code, we are a limited partnership and do not meet the definition of a “corporation” under Section 162(m). Thus, the compensation that we pay to our employees is not subject to the deduction limitations under Section 162(m) of the Code.
Anti-Hedging Policy
Under our trading policies, directors, executive officers, and other employees, as well as persons sharing their households or their designees, are prohibited from engaging in any speculative, hedging, or derivative security transaction that primarily involves or references CEQP securities.
Clawback Policy
In November 2022, the Compensation Committee approved a Clawback Policy. The Clawback Policy provides that, in the event the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws, the Company will recover (on a pre-tax basis) the amount of incentive-based compensation received by its current and former executive officers in excess of the amount of incentive-based compensation that would have been received had it been determined based on the restated amount, subject to limited exceptions.
Common Unit Ownership Guidelines for Executives
The Company adopted common unit ownership guidelines for its executive officers on January 1, 2023. The guidelines are intended to align the interests of the Company’s executive officers and the Company’s unitholders by requiring executives to accumulate and retain a meaningful amount of the Company’s common units. Under the guidelines, the executive officers must comply with the following minimum ownership requirements:
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Common units that count toward satisfaction of these Guidelines include: (i) common units owned directly by the executive officer or director; (ii) common units owned indirectly by the executive officer or director (e.g, by a spouse or other immediate family member residing in the same household or a trust for the benefit of the executive officer or director or his or her family), whether held individually or jointly; (iii) common units granted under the Company’s long-term incentive plans. Unvested and unearned performance units do not count towards compliance guidelines. All of the NEOs are currently in compliance with the Company’s ownership guidelines.
Unitholder Advisory Vote to Approve Executive Compensation
As described above in the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our unitholders and that the total compensation provided to the NEOs (including potential payouts upon a termination or change of control) is reasonable and not excessive. As you consider this proposal, we urge you to read the CD&A section of this proxy statement for additional details on executive compensation, including the more detailed information about our compensation philosophy and objectives, and to review the tabular disclosures regarding NEO compensation together with the accompanying narrative disclosures in the “Executive Compensation” section of this proxy statement.
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)
Angela A. Minas
Frances M. Vallejo
Executive Compensation
Summary Compensation Table
The following table sets forth for the year ended December 31, 2022, the compensation reportable for the named executive officers, as determined by SEC rules.
2022 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 | 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 |
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Name | 401(k) Matching Contributions ($) | Group Term Life Insurance ($) | Other ($)(1)(2) | Total ($) | ||||||||||||||||
Robert G. Phillips | 18,300 | 2,286 | 82,253 | 102,839 | ||||||||||||||||
Robert T. Halpin | 18,300 | 162 | 14,139 | 32,601 | ||||||||||||||||
John W. Black | 18,300 | 54 | — | 18,354 | ||||||||||||||||
William H. Moore | 18,300 | 60 | 20,283 | 38,643 | ||||||||||||||||
Steven M. Dougherty | 18,300 | 414 | — | 18,714 | ||||||||||||||||
Joel C. Lambert | 18,300 | 414 | — | 18,714 |
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Executive Compensation
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Grants of Plan-Based Awards
Grants of Plan-Based Awards in 2022
Name | 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 (#) | |||||||||||||||||||||||||||||||
Robert G. Phillips | 01/05/22 | 115,984 | 3,235,954 | |||||||||||||||||||||||||||||||||
02/14/22 | 800,000 | 1,000,000 | 1,400,000 | 32,751 | 65,502 | 131,004 | 2,052,040 | |||||||||||||||||||||||||||||
Robert T. Halpin | 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 | |||||||||||||||||||||||||||||||||
02/14/22 | 400,000 | 360,000 | 504,000 | 1,883 | 3,766 | 7,532 | 117,983 | |||||||||||||||||||||||||||||
William H. Moore | 01/05/22 | 34,659 | 966,986 | |||||||||||||||||||||||||||||||||
02/14/22 | 425,000 | 425,000 | 595,000 | 10,440 | 20,879 | 41,758 | 654,100 | |||||||||||||||||||||||||||||
Steven M. Dougherty | 01/05/22 | 42,407 | 1,183,155 | |||||||||||||||||||||||||||||||||
02/14/22 | 450,000 | 405,000 | 567,000 | 6,141 | 12,282 | 24,564 | 384,775 | |||||||||||||||||||||||||||||
Joel C. Lambert | 01/05/22 | 42,588 | 1,188,205 | |||||||||||||||||||||||||||||||||
02/14/22 | 470,000 | 423,000 | 592,200 | 9,553 | 19,105 | 38,210 | 598,527 |
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Executive Compensation
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
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 (i) outstanding Common Units and (ii) 7,125,745 Common Units underlying the executive’s base salary and average annual bonus for the prior two years, payable in equal installments overPreferred Units, on 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 of Control and ending twelve months after a Change of 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 of Control payments for the NEOs, please see the section below titled “Potential Payments Upon Termination or Change of Control.”
Executive Compensationas-converted basis.
Outstanding Equity Awards and Units Vested
The following table summarizes the outstanding equity awards as of the end of Fiscal 2022 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 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 $26.19 on December 30, 2022.
Outstanding Equity Awards at 2022 Fiscal Year-End
Unit Awards | ||||||||||||||||||||||||||||||
Name | Restricted Units That Have Not Vested | Vest Date | Market Value of Units That Have Not Vested($) | 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
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 ($) | ||||||||||||||||||||||||
William H. Moore | 16,223 | January 2, 2023 | 424,880 | 10,360 | February 10, 2023 | 271,328 | ||||||||||||||||||||||||
9,613 | January 3, 2023 | 251,764 | 4,000 | February 16, 2024 | 104,760 | |||||||||||||||||||||||||
11,553 | January 5, 2023 | 302,573 | 20,879 | February 14, 2025 | 546,821 | |||||||||||||||||||||||||
15,609 | January 6, 2023 | 408,800 | ||||||||||||||||||||||||||||
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 | 8,112 | January 2, 2023 | 212,453 | 10,360 | February 10, 2023 | 271,328 | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
5,000 | January 6, 2024 | 130,950 | ||||||||||||||||||||||||||||
17,189 | January 6, 2024 | 450,180 | ||||||||||||||||||||||||||||
11,406 | December 27, 2024 | 298,723 | ||||||||||||||||||||||||||||
14,136 | January 5, 2025 | 370,222 | ||||||||||||||||||||||||||||
Joel C. Lambert | 12,709 | January 3, 2023 | 332,849 | 12,949 | February 10, 2023 | 339,134 | ||||||||||||||||||||||||
14,196 | January 5, 2023 | 371,793 | 5,000 | February 16, 2024 | 130,950 | |||||||||||||||||||||||||
20,636 | January 6, 2023 | 540,457 | 19,105 | February 14, 2025 | 500,360 | |||||||||||||||||||||||||
14,196 | January 5, 2024 | 371,793 | ||||||||||||||||||||||||||||
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 |
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Executive Compensation
Units Vested in 2022
The following table provides information regarding restricted and performance units vesting during Fiscal 2022 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 | ||||||||||
Name | Number of Units Acquired on Vesting | Value Realized on Vesting ($) | ||||||||
Robert G. Phillips | 402,441 | 11,324,193 | ||||||||
Robert T. Halpin | 127,518 | 3,585,190 | ||||||||
John W. Black | 20,871 | 589,230 | ||||||||
William H. Moore | 90,485 | 2,544,856 | ||||||||
Steven M. Dougherty | 94,034 | 2,644,227 | ||||||||
Joel C. Lambert | 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 of Control
Termination and Change 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 of Control and ending twelve months after a Change of 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:
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Executive Compensation
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As 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 of Control, or a termination due to a termination without cause. In August 2021, the plan was amended to modify the definition of a Change of Control, the new definition of which is defined below. With respect to any performance unit that is outstanding at the time of a Change of 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 of 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
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 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, 2022. The amounts that each NEO could receive separately upon a Change of 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 30, 2022, which was $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.
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) |
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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
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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, 2022:
| securities to be issued upon exercise of outstanding options, warrants and rights | average exercise price of outstanding options, warrants and rights | remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||||||
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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.
Nonqualified Deferred Compensation Plan
Our Compensation Committee adopted the Crestwood Nonqualified Deferred Compensation Plan 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 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.
Executive Compensation
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 29,784 common units were purchased under the Plan, respectively.
Pay Ratio Disclosure
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 2022 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, 2022. We included all fulltime, salaried and hourly employees. As of December 31, 2022, we employed 727 such persons. We annualized the compensation for any employees that were not employed for all of 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 2022 compensation for the median employee using the same methodology used to calculate the CEO’s total compensation as reflected in the Summary Compensation Table above. The median employee’s annual 2022 compensation was as follows:
Name | Year | Salary | Bonus | Equity Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | ||||||||||||||||||||||||||||
Median Employee | 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 2022 Summary Compensation Table included in this Proxy Statement, which was $7,040,833. Our 2022 ratio of Chief Executive Officer total compensation to our median employee’s total compensation is reasonably estimated to be 63:1.
Year | Summary Compensation Table Total for PEO ($)(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 ($)(6) | |||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||||||
2022 | 7,040,833 | 6,797,345 | 2,487,914 | 2,378,416 | 115.51 | 188.53 | 72,500,000 | 762,100,000 | ||||||||||||||||||||||||||||||||
2021 | 8,540,078 | 15,312,180 | 3,023,159 | 4,425,602 | 110.50 | 127.84 | (37,400,000 | ) | 600,100,000 | |||||||||||||||||||||||||||||||
2020 | 6,966,286 | 1,380,580 | 2,792,688 | 830,408 | 69.70 | 84.00 | (15,300,000 | ) | 580,300,000 |
PEO — Pay Versus Performance Reconciled to Summary Compensation Table (SCT) | ||||||||||||||||||||
Year | SCT Total ($) | Equity Award Deductions from SCT Total ($) | Equity Award Adjustments at Year End* ($) | CAP Total ($) | ||||||||||||||||
2022 | 7,040,833 | (5,287,994 | ) | 5,044,506 | 6,797,345 | |||||||||||||||
2021 | 8,540,078 | (5,581,674 | ) | 12,353,776 | 15,312,180 | |||||||||||||||
2020 | 6,966,286 | (4,783,070 | ) | ( 802,636 ) | 1,380,580 |
PEO — * Equity award adjustment reconciliation | ||||||||||||||||||||
Year | Year-end Fair Value of Unvested Awards Granted During Year ($) | 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 | ) |
Recently Completed Fiscal Year to Company Performance |
(1) | ||||
Certain Relationships and Related Person
Transactions
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:
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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:
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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 as empaneling that committee is entirely at the discretion of the General Partner. In many ways, the decision to engage the Conflicts Committee can be analogized to the kinds of transactions for which a Delaware corporation might establish a special committee of independent directors. The General Partner considers the specific facts and circumstances involved. Relevant facts would include:
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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:
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Report of the Audit Committee
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 Audit Committee reviewed and discussed with management the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022.
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 Audit Committee discussed with Ernst & Young LLP the matters required to be discussed under applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee received written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP its independence from management and the Partnership.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC.
The Audit Committee
Angela A. Minas, Chair
Name and Address(1) | Number of Common Units(2) | Percentage of Outstanding Common Units | Number of Preferred Units | Percentage of Outstanding Preferred Units | Percentage of All Outstanding Voting Units(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALPS Advisors, Inc.(4) | 12,335,027 | 11.7 | % | — | — | 11.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FR XIII Crestwood Permian Basin Holdings LLC(5) | 11,257,436 | 10.7 | % | — | — | 10.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CIBC Private Wealth Group, LLC(6) | — | — | 9,755,026 | 13.7 | % | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diaco Aviki | 124,283 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John Black | 85,979 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven M. Dougherty(7) | 273,302 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warren H. Gfeller | 65,964 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert T. Halpin | 550,839 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Janeen S. Judah | 21,879 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joel C. Lambert | 346,024 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David Lumpkins | 55,571 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Angela A. Minas | 8,186 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William H. Moore | 238,534 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert G. Phillips | 1,166,169 | 1.1 | % | — | — | 1.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gary D. Reaves | 8,065 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John J. Sherman | 3,245,463 | 3.1 | % | — | — | 2.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Frances M. Vallejo
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Clay C. Williams | 8,186 | * | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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