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TABLE OF CONTENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Definitive Proxy Statement | ||
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o | Soliciting Material under §240.14a-12 |
Equitrans Midstream Corporation | ||||
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April 26, 2019March 8, 2021
Fellow Shareholders, |
On behalf of the Board of Directors and management of Equitrans Midstream Corporation, I am pleased to invite you to participate in our firstthird annual meeting of shareholders to be held on Tuesday, June 11, 2019April 27, 2021, at 9:00 a.m. Eastern Time(ET), to be held virtually via live webcast at www.virtualshareholdermeeting.com/ETRN2021. Given the law offices of McGuireWoods LLP, located at Tower Two-Sixty, 260 Forbes Avenue, Suite 1800, Pittsburgh, Pennsylvania 15222. We became a publicly traded company in November 2018, when EQT Corporation (our former parent company) made a pro-rata distribution of 80.1%ongoing public health considerations associated with COVID-19, and because the health, safety, and well-being of our outstanding common stockemployees and shareholders is of utmost importance to its shareholders. Asus, conducting our meeting virtually will enhance shareholders' ability to participate, vote, and ask questions during the annual meeting in a result of the separation, we now operatesafe and efficient manner.
Equitrans Midstream began operations as an independent, public company in November 2018 and our common stock tradesis traded on the New York Stock Exchange under the symbol "ETRN." Your continued interest in and support of our Company is invaluable and receiving shareholder feedback is instrumental to our future success.
YouThis year you will be asked to vote on several items at the annual meeting, including the election of directors, approval of our executive compensation program for 20182020 (the say-on-pay vote), approval of amendments to our Articles of Incorporation and Bylaws to remove the frequency with which we should conduct a say-on-pay vote,supermajority voting requirements, and ratification of the appointment of our independent registered public accounting firm for 2019.2021. The proxy statement describes these items in more detail. PleaseYour vote is important — please read the proxy materials and follow the voting instructions to ensure your shares are represented at the meeting.
Your vote is important. Whether or not you plan to attendparticipate in the annual meeting, please vote as soon as possible — by telephone, via the Internet, or by completing and signing your paper proxy card or vote instruction form — to ensure that your shares are represented and voted.
Since completion ofWe move the separation,energy that keeps America moving and our employees have taken much pride in helping Equitrans Midstream Corporation achieve its vision to become the premier, top-tier midstream company in North America. Our goalmission is simple — to provide safe, reliable, and innovative infrastructure solutions for the energy industry. Moving forward as a standalone midstream organization,The principles that guide our behaviors and decisions are based on our five core values: safety, integrity, collaboration, transparency, and excellence. With these values in mind, we will operate with integrity, accountability, and transparency to:will:
I look forward to reporting on our progress and many successes during the annual meeting.meeting, including efforts to enhance our Environmental, Social, and Governance platform; and the publication of our first annual Corporate Sustainability Report, produced in accordance with the Global Reporting Initiative and the Sustainability Accounting Standards Board Oil & Gas — Midstream Standards. Thank you for your investment in Equitrans Midstream Corporation and your participation in our first annual meeting of shareholders.
Thomas F. Karam
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Notice ofAnnual Meeting of Shareholders |
WHEN: The annual meeting of shareholders of Equitrans Midstream Corporation (the Company or Equitrans Midstream) will be held on Tuesday, June 11, 2019,April 27, 2021, at 9:00 a.m. (Eastern Time) virtually via live webcast at the law offices of McGuireWoods LLP, located at Tower Two-Sixty, 260 Forbes Avenue, Suite 1800, Pittsburgh, Pennsylvania 15222.www.virtualshareholdermeeting.com/ETRN2021.
RECORD DATE: Our Board of Directors has established the close of business on April 12, 2019February 19, 2021 as the record date for determining shareholders entitled to receive notice of, and to vote at, the annual meeting and any adjournment or postponement of the meeting.
ITEMS OF BUSINESS: The following matters will be voted on at the meeting:
VOTING: Please consider the issues presented in the attached proxy statement and vote your shares as soon as possible by following the voting instructions included in the proxy statement.
ATTENDINGPARTICIPATING IN THE MEETING: Due to the ongoing public health considerations associated with the coronavirus disease 2019 (COVID-19), we will be holding our 2021 annual meeting of shareholders solely via webcast. You will be able to participate in the meeting online, vote your shares electronically and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/ETRN2021. To participate in the meeting, you will need the 16-digit control number on your notice of Internet availability of proxy materials, your voting instruction form or your proxy card. If you plan to attendparticipate in the meeting, please follow the advance registration instructions under "Additional Information — AttendingParticipating in the Annual Meeting and Obtaining an Admission Ticket"Meeting" on page 6562 of the proxy statement and watch for an admission ticket in the mail. You will need an admission ticket and photo identification to enter the meeting.statement.
On behalf of the Board of Directors,
Tobin M. Nelson |
Deputy General Counsel & Corporate Secretary
April 26, 2019March 8, 2021
Important NoticeRegarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to Be Held June 11, 2019:April 27, 2021:
This notice and proxy statement and our annual report on Form 10-K for the year ended
December 31, 20182020 are also available online at http://www.voteproxy.com.www.proxyvote.com.
| We commenced providing our proxy materials, or a notice of Internet availability providing access to such materials, on or about | |
TABLE OF CONTENTS |
Proxy Statement Summary | | i |
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Item No. 1 – Election of Directors | | 1 |
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Director Nominees | | 3 |
Corporate Governance and Board Matters | | 7 |
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Board Meetings and Committees | | 7 |
Compensation Process | | |
Board Leadership Structure | | |
Board's Role in Risk Oversight | | |
Director Nominations | | |
Contacting the Board | | |
Governance Principles | | |
Independence and Related Person Transactions | | |
Compensation Committee Interlocks and Insider Participation | | |
Directors' Compensation | | |
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Equity-Based Compensation | | |
Deferred Compensation | | |
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Other | | |
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Equity Ownership | | |
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Stock Ownership of Significant Shareholders | | |
Equity Ownership of Directors and Executive Officers | | |
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| 24 | |
Delinquent Section 16(a) | | |
Executive Compensation Information | | |
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Compensation Discussion and Analysis | | |
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Our 2020 Named Executive Officers | | |
Executive Summary | | |
| | 28 |
How We Determine Executive | | |
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Other | | |
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Report of the Management Development and Compensation Committee | | |
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Executive Compensation Tables | | 38 |
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Summary Compensation Table | | |
| 39 | |
| | 40 |
Narrative Disclosure to Summary Compensation Table and 2020 Grants of Plan-Based Awards Table | | 41 |
Outstanding Equity Awards at Fiscal Year-End | |
Option Exercises and Stock Vested | | |
Potential Payments Upon Termination or Change of Control | | 44 |
Pay Ratio Disclosure | | 50 |
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Employee, Officer and Director Hedging | | 51 |
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Item No. 2 – Advisory Vote on the Compensation of the Company's Named Executive Officers for | | |
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Item No. 3 – | | |
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Report of the Audit Committee | | |
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Item No. 4 – Ratification of Appointment of Independent Registered Public Accounting Firm | | |
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Securities Authorized for Issuance Under Equity Compensation Plans | | |
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Equitrans Midstream Corporation Directors' Deferred Compensation Plan | | |
Additional Information | | |
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Proposals, Board Recommendations, Vote Required, and Broker Non-Votes | | |
Corporate Secretary Contact Information | | |
Notice of Internet Availability of Proxy Materials | | |
Voting Instructions | | |
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Other Matters | | |
Appendices | | A-1 |
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Appendix A – Related Person Transactions with EQT | | A-1 |
Appendix B – Non-GAAP Financial Information | | B-1 |
Appendix C – Proposed Amendments to Amended and Restated Articles of Incorporation of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements | | C-1 |
Appendix D – Proposed Amendments to Second Amended and Restated Bylaws of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements | | D-1 |
PROXY STATEMENT SUMMARY
WE EXECUTED ON THE FINAL STEP OF OUR SIMPLIFICATION STRATEGY | | This summary highlights information about Equitrans Midstream Corporation and the upcoming |
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Following the Separation,In June 2020, we executed a serieson the final step of transactions to enhance and simplify our operating structure (the Simplification Transactions) as well as grow our asset footprint. Following completionsimplification strategy when we acquired all of the Simplification Transactions and as of March 31, 2019, we owned 117,245,455outstanding public common units and 7,000,000 Class B units inof EQM Midstream Partners, LP (NYSE: EQM) (collectively representing(EQM), our former publicly traded master limited partnership, in a 59.9% limited partner interestshare-for-unit transaction in EQM) andwhich each outstanding EQM common unit was exchanged for 2.44 shares of Company common stock (the EQM Merger). In connection with the entire non-economic general partner interest in EQM while the public owned a 40.1% limited partner interest in EQM. Following the completionMerger, EQM redeemed $600 million aggregate principal amount of a private placement, certain investors owned an aggregate of 24.6 millionEQM's outstanding Series A Perpetual Convertible Preferred Units (EQM Series A Preferred UnitsUnits), and taking into account suchthe Company issued newly created Equitrans Midstream preferred stock (Series A Preferred Shares) for the remaining portion of the outstanding EQM Series A Preferred Units issuedUnits. Contemporaneously with the announcement of the EQM Merger in February 2020, the Company also announced (i) a new 15-year global gas gathering agreement with EQT Corporation (EQT), the largest natural gas producer in the private placementUnited States, based on an as-converted basis, asaverage daily sales volumes, and the Company's largest customer, providing for 3.0 Bcf per day of March 31, 2019,initial minimum volume commitments (MVCs) with gradual step-ups to 4.0 Bcf per day following the Company would have owned, directly or indirectly, a 53.5% limited partner interest in EQM,full in-service date of the Mountain Valley Pipeline (MVP), as well as the non-economic general partner interest in EQM. EQM isdedication of a growth oriented publicly traded limited partnership that owns, operates, acquires and develops midstream assetssubstantial majority of EQT's core acreage in the Appalachian Basin. EQM services producers, utilitiesprolific Marcellus Shale play in Pennsylvania and other customers throughWest Virginia (the EQT Global GGA), and (ii) two share purchase agreements with EQT pursuant to which the Company repurchased and retired 25,299,752 shares of its strategically located natural gas transmission, storage, and gathering systems, and provides water services to support energy development and productioncommon stock, which at the time represented approximately 10% of the Company's outstanding common stock. A graphical depiction of the Company's key strategic transactions since its separation from EQT in November 2018 that culminated in the MarcellusEQM Merger and Utica regions.a single, pure-play midstream, public corporation is below:
Equitrans Midstream Corporation - 20192021 Proxy Statement i
ANNUAL MEETING |
Time and Date: | 9:00 a.m. (Eastern Time) on Tuesday, | ||
Place: | |||
Record Date: | |||
You are entitled to |
VIRTUAL ANNUAL MEETING |
Due to the ongoing public health considerations associated with COVID-19, and because the health, safety and well-being of our employees and shareholders is of utmost importance to us, we will be holding our 2021 annual meeting of shareholders solely via webcast. We remain sensitive to concerns regarding virtual meetings generally from investor advisory groups and other shareholder rights advocates that have voiced concerns that virtual meetings may diminish shareholder voice or reduce accountability. Accordingly, we have designed the procedures for our virtual meeting format to enhance, rather than constrain, shareholder access, participation and communication, allowing a shareholder to participate fully and equally from any location at no cost to the shareholder. For example, the online format allows shareholders to communicate with us during the meeting so they can ask appropriate questions of our Board of Directors or management in accordance with the rules of conduct for the meeting and allow shareholders to vote electronically. See "Participating in the Annual Meeting" for additional information.
MATTERS TO BE VOTED UPON |
| Board Voting Recommendation | Page for Information | |||
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Item No. 1: Election of | FOR EACH NOMINEE | 1 | |||
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Item No. 2: Approval, on an advisory basis, of the compensation of Equitrans Midstream's named executive officers for | FOR | | |||
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Item No. 3: Approval | FOR | | |||
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Item No. 4: Ratification of the appointment of Ernst & Young LLP as Equitrans Midstream's independent registered public accounting firm for | FOR | | |||
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ii Equitrans Midstream Corporation - 20192021 Proxy Statement
BOARD AND BOARD COMMITTEES |
| | | | Equitrans Midstream Board Committee Membership | | | | | Equitrans Midstream Board Committee Membership | |||||||||||||||||||||
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Name, Principal Occupation & Current Other Public Company Board Service | | Director Since | | Name, Principal Occupation & Current Other Public Company Board Service | | Director Since | | |||||||||||||||||||||||
Age | Independent | AC | CGC | MDCC | HSSE | Age | Independent | AC | CGC | MDCC | HSSE | |||||||||||||||||||
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Vicky A. Bailey | 66 | 2018 | Vicky A. Bailey | 68 | 2018 | |||||||||||||||||||||||||
President, Anderson Stratton International, LLC & Vice President, BHMM Energy Services, LLC | Chair | President, Anderson Stratton International, LLC & Vice President, BHMM Energy Services, LLC | Chair | |||||||||||||||||||||||||||
Current Other Public Company Boards: Cheniere Energy, Inc., PNM Resources, Inc. | Current Other Public Company Boards: Cheniere Energy, Inc., PNM Resources, Inc. | |||||||||||||||||||||||||||||
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Kenneth M. Burke | 70 | 2018 | Sarah M. Barpoulis | 55 | 2020 | |||||||||||||||||||||||||
Retired Partner, Ernst & Young LLP | Chair | President, Interim Energy Solutions, LLC | ||||||||||||||||||||||||||||
Current Other Public Company Boards: EQM Midstream Partners, LP | Current Other Public Company Boards: South Jersey Industries, Inc. | |||||||||||||||||||||||||||||
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Margaret K. Dorman | 55 | 2018 | Kenneth M. Burke | 71 | 2018 | |||||||||||||||||||||||||
Retired Executive Vice President, Chief Financial Officer and Treasurer, Smith International, Inc. | Chair | Retired Partner, Ernst & Young LLP | Chair | |||||||||||||||||||||||||||
Current Other Public Company Boards: None | Current Other Public Company Boards: None | |||||||||||||||||||||||||||||
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Thomas F. Karam | 60 | 2018 | Patricia K. Collawn | 62 | 2020 | |||||||||||||||||||||||||
President and Chief Executive Officer, Equitrans Midstream Corporation | Chairman, President and Chief Executive Officer, PNM Resources, Inc. | |||||||||||||||||||||||||||||
Current Other Public Company Boards: EQM Midstream Partners, LP | Current Other Public Company Boards: PNM Resources, Inc., CTS Corporation* | |||||||||||||||||||||||||||||
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David L. Porges (Chairman) | 61 | 2018 | Margaret K. Dorman | 57 | 2018 | |||||||||||||||||||||||||
Chairman, Equitrans Midstream Corporation and Retired Chairman, President and Chief Executive Officer, EQT Corporation | Retired Executive Vice President, Chief Financial Officer and Treasurer, Smith International, Inc. | Chair | ||||||||||||||||||||||||||||
Current Other Public Company Boards: None | Current Other Public Company Boards: Range Resources Corporation | |||||||||||||||||||||||||||||
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Norman J. Szydlowski | 67 | 2018 | Thomas F. Karam (Chairman) | 62 | 2018 | |||||||||||||||||||||||||
Retired President and Chief Executive Officer, SemGroup Corporation | Chair | Chairman and Chief Executive Officer, Equitrans Midstream Corporation | ||||||||||||||||||||||||||||
Current Other Public Company Boards: None | Current Other Public Company Boards: None | |||||||||||||||||||||||||||||
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Robert F. Vagt (Lead Independent Director) | 72 | 2018 | D. Mark Leland | 59 | 2020 | |||||||||||||||||||||||||
Retired President, The Heinz Endowments | Retired Interim Chief Executive Officer, Deltic Timber Corporation and former Executive Vice President and Chief Financial Officer, El Paso Corporation | |||||||||||||||||||||||||||||
Current Other Public Company Boards: Kinder Morgan, Inc. | Current Other Public Company Boards: PotlatchDeltic Corporation, Altus Midstream Company | |||||||||||||||||||||||||||||
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Norman J. Szydlowski | 69 | 2018 | ||||||||||||||||||||||||||||
Retired President and Chief Executive Officer, SemGroup Corporation | Chair | |||||||||||||||||||||||||||||
Current Other Public Company Boards: None | ||||||||||||||||||||||||||||||
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Robert F. Vagt (Lead Independent Director) | 73 | 2018 | ||||||||||||||||||||||||||||
Retired President, The Heinz Endowments | ||||||||||||||||||||||||||||||
Current Other Public Company Boards: Kinder Morgan, Inc. | ||||||||||||||||||||||||||||||
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AC | Audit Committee | MDCC | Management Development and Compensation Committee | ||||
CGC | Corporate Governance Committee | HSSE | Health, Safety, Security and Environmental Committee |
Equitrans Midstream Corporation - 20192021 Proxy Statement iii
GOVERNANCE HIGHLIGHTS |
BUSINESS HIGHLIGHTS |
While the COVID-19 outbreak has significantly impacted the manner in which our employees and contractors perform their job functions, the outbreak has had, and continues to have, a minimal impact on our overall operations. As a midstream energy company, during applicable state-issued stay-at-home orders, we have been recognized as an essential business under various regulations related to the COVID-19 outbreak and continued to operate as permitted under these regulations. We have proactively undertaken a number of companywide measures intended to promote the safety of field and office-based employees and contractors. These measures include, among other things, establishing an Infectious Disease Response Team, instituting enhanced self-protection and office sanitation measures, eliminating non-essential business travel, implementing a mandatory work-from-home protocol for a substantial majority of our employees through at least June 1, 2021, instituting face covering protocols, providing certain medical benefit enhancements, practicing social distancing in the field where possible, sharing our infectious disease response plan with suppliers and contractors, and timely communicating updates to employees and other relevant parties. In addition, we have implemented additional mitigation efforts in connection with the remobilization of certain field level employees and contractors. Our Infectious Disease Response Team continues to monitor and assist in implementing mitigation efforts in respect of potential areas of risk for us and our stakeholders. Additionally, we have provided support to local communities through corporate giving and the Equitrans Midstream Foundation. We have been able to maintain a consistent level of effectiveness through the measures taken.
iv Equitrans Midstream Corporation - 20192021 Proxy Statement
COMPENSATION HIGHLIGHTS |
The Management Development and Compensation Committee (Compensation Committee) of the Company's Board of Directors adopted a compensation philosophy and developed programs and practices that seek to (i) align total direct compensation for our named executive officers (NEOs) using market comparables and other relevant factors; and (ii) deliver transparency and fairness to shareholders, employees and other stakeholders while encouraging sound business strategy and execution that leads to long-term and sustainable shareholder value. At our 2020 annual meeting, our say-on-pay proposal received support from over 97% of our shares voted, leading the Compensation Committee to believe our compensation programs and practices have strong shareholder support. The primary components of our 2020 compensation program were:
The compensation program is designed to provide an appropriate mix of fixed and variable pay to encourage retention and corporate sustainability to increase long-term and sustainable shareholder value. The program is weighted towards variable pay that requires the Company to achieve well defined performance metrics in order for NEOs to realize performance-based annual and long-term incentives. The charts below reflect the fixed and at-risk components of the 2020 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) our other NEOs. The amounts for each component of total direct compensation (TDC) set forth in the charts below were calculated in accordance with Securities and Exchange Commission (SEC) rules. TDC, which is not a substitute for the total compensation as reported in the Summary Compensation Table on page 39 of this proxy statement, omits certain other compensation (e.g., 401(k) contributions and perquisites) that is reflected in the Summary Compensation Table. For additional information, including information regarding how total compensation is calculated under SEC rules, see the footnotes accompanying the Summary Compensation Table.
Equitrans Midstream Corporation - 2021 Proxy Statementv
IMPORTANT DATES FOR |
Shareholder proposals submitted for inclusion in Equitrans Midstream's |
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Under Equitrans Midstream's |
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Under |
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For additional information, see "Additional Information – Shareholder Proposals and Director Nominations" on page |
vi Equitrans Midstream Corporation - 20192021 Proxy Statementv
ITEM NO. 1 – ELECTION OF DIRECTORS |
The Board of Directors recommends a voteFOReach nominee for the Board of Directors. |
Our Board of Directors, sometimes referred to in this proxy statement as the Board or our Board, is presenting sevennine nominees for election as directors at our annual meeting. All nominees currently serve on our Board of Directors and their current terms will expire at the 20192021 annual meeting. Mses. Vicky A. Bailey, Sarah M. Barpoulis, Patricia K. Collawn, and Margaret K. Dorman, and Messrs. Kenneth M. Burke, Thomas F. Karam, David L. Porges,D. Mark Leland, Norman J. Szydlowski, and Robert F. Vagt, have been nominated to serve for a term of one year to expire at the 20202022 annual meeting, or until their earlier removal or resignation or a successor is duly elected and qualified. Each nominee consents to being named in this proxy statement and to serve if elected. The Board has no reason to believe that any nominee will be unavailable or unable to serve. If any nominee is unable to stand for election for any reason, then the shares represented at our annual meeting will be voted by the persons named as proxies for substitute nominees proposed by the Board, unless the Board decides to reduce its size.
The Board, following the recommendation of the Corporate Governance Committee, selected our nine nominees based on a review of the attributes discussed on page 14 under "Corporate Governance and Board Matters – Director Nominations." Our Board believes that the nominees, individually and as a whole, possess qualifications consistent with our desired attributes and will provide management with strong independent oversight as we implement our strategic objectives. The following chart provides an overview of the attributes represented on our Board of Directors, in addition to each director's competencies included in the director profiles on the following pages.
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Equitrans Midstream Corporation - 2019 Proxy Statement1
Each of our director nominees brings a unique skillset to the Board of Directors. Notably, all sevennine of our director nominees:
Equitrans Midstream Corporation - 2021 Proxy Statement1
Our director nominees are also experienced in the following areas:
Each nominee must be elected by a majority of the votes cast FOR that director's election, and votes may not be cumulated. The persons named as proxies will vote FOR the nominees named, unless you vote against, or abstain from voting for or against, one or more of them.
In addition, under our bylaws,Bylaws, each nominee has submitted an irrevocable conditional resignation to be effective if the nominee receives a greater number of votes against than votes FOR his or her election in an uncontested election. If this occurs, the Board will decide whether to accept the tendered resignation no later than 90 days after certification of the election. The Board's determination shall be made without the participation of any nominee whose resignation is under consideration with respect to the election. The Board's explanation of its decision will be promptly disclosed on a Form 8-K furnished to the SEC.
2 Equitrans Midstream Corporation - 20192021 Proxy Statement
Director Nominees |
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Vicky A. Bailey | | Age | | Director since November 2018 |
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Ms. Baileyserved as a director of EQT Corporation from June 2004 until the Separation. Ms. Bailey has served as President, Anderson Stratton International, LLC (strategic consulting and government relations), since November 2005; and Vice President, BHMM Energy Services, LLC (utility and facilities management services), since January 2006. Ms. Bailey has been a director of Cheniere Energy, Inc. (an energy company primarily engaged in liquefied natural gas related businesses), since March 2006 where she serves as a member of the Audit and Governance and Nominating Committees and a director of PNM Resources, Inc. (an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas) (PNM) since January 2019.2019 where she serves as a member of the Audit and Ethics Committee and Chair of the Nominating and Governance Committee. She was a director of EQT Corporation from June 2004 until November 12, 2018, when EQT spun out Equitrans Midstream into a separate publicly traded company (the Separation), and of Cleco Corporation (an energy services company with regulated utility and wholesale energy businesses) from June 2013 through March 2016.
Qualifications: Ms. Bailey has substantial regulatory and senior management experience in the energy industry, having previously served as a commissioner of the Federal Energy Regulatory Commission, President of PSI Energy, Inc. (a regulated utility) and commissioner of the Indiana Utility Regulatory Commission. These experiences enable her to provide valuable insights into issues facing the Company's regulated transmission business, particularly with respect to interacting with regulatory agencies. In addition, Ms. Bailey provides leadership to the Board with respect to energy policy issues, owing to her previous experience as Assistant Secretary for the Office of Policy and International Affairs at the Department of Energy. Ms. Bailey also draws upon public company board experience in supporting the Company's strategic efforts.
Ms. Bailey is Chair of the Corporate Governance Committee and a member of the Health, Safety, Security and Environmental (HSSE) Committee.
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Sarah M. Barpoulis | | Age 55 | | Director since February 2020 |
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Ms. Barpoulis is the founder and President of Interim Energy Solutions, LLC (an advisory service firm providing asset management and risk management consulting, and litigation support services to the energy sector) since 2003. She has served as a director of South Jersey Industries, Inc. (a publicly traded energy services holding company) since April 2012 where she serves as a member of the Audit Committee (serving as Chair since 2017), the Executive Committee, the Strategy and Finance Committee and the Compensation Committee. She previously served as a director of SemGroup Corporation (a publicly traded provider of gathering, transmission, storage, distribution, marketing and other midstream services) (SemGroup) from October 2009 through the sale of SemGroup to Energy Transfer, LP in December 2019.
Qualifications:Ms. Barpoulis brings nearly 30 years of experience in the energy industry, significant executive-level leadership experience as well as valuable risk management, business planning and commercial expertise through her work as an energy advisor and consultant through Interim Energy Solutions, LLC and her varied roles of increasing responsibility over more than a decade with PG&E National Energy Group, a company that, among other things, developed, built, owned and operated electric generating and natural gas pipeline facilities. Ms. Barpoulis also brings significant public company board experience from her service on the boards of directors of a number of public companies. Ms. Barpoulis is a National Association of Corporate Directors Board Leadership Fellow, demonstrating her commitment to the highest standards of board leadership.
Ms. Barpoulis is a member of the Corporate Governance Committee and the HSSE Committee.
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Equitrans Midstream Corporation - 2021 Proxy Statement3
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Kenneth M. Burke | | Age | | Director since November 2018 |
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Mr. Burkeserved as a director of EQT Corporation from January 2012 until the Separation. Mr. Burke was a Partner at Ernst & Young LLP (EY) (a Big Four accounting firm) betweenfrom October 1982 andthrough June 2004. Mr. Burke served on the board of directors of Nexeo Solutions, Inc. (a publicly traded global chemical distributor) from November 2011 until its acquisition in March 2019. HeMr. Burke also was appointed to the boards of directors of the general partners of EQM Midstream Partners, LP (EQM) and EQGP Holdings, LP (EQGP) in September 2018, and serves as a member, both of the Audit Committee of EQM's general partner. Mr. Burke served on the board of directors and as Chair of the Audit Committee of EQGP's general partner until the Company's acquisition of the interests in EQGP not heldwhich were publicly traded master limited partnerships controlled by the Company, in September 2018, serving in such capacities until the Company's acquisitions of the outstanding public common units of each of EQM and EQGP in June 2020 and January 2019, (the EQGP Buy-In).respectively. Mr. Burke also served on and chaired the Audit Committees of the boards of directors of the general partners of EQM and EQGP. Mr. Burke served as a director of EQT Corporation from January 2012 until the Separation.
Qualifications: Mr. Burke brings over three decades of experience focused on the energy industry, primarily oil and gas. Mr. Burke retired from EY in 2004, where he held a number of leadership positions, including National Energy Industry Director and Partner-in-Charge of the Houston Energy Services Group. He also co-authored the book "Oil and Gas Limited Partnerships: Accounting, Reporting and Taxation." During his years at EY, Mr. Burke served as audit partner for numerous companies in the oil and gas industry. Mr. Burke also has substantial experience as a director of both public and private companies where he has served on and chaired a number of committees.
Mr. Burke is Chair of the Audit Committee and a member of the Corporate Governance Committee.
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Patricia K. Collawn | | Age 62 | | Director since April 2020 |
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Ms. Collawn has served as President and Chief Executive Officer of PNM since 2010. She has also served as a director of PNM since 2010 and was appointed Chairman of its board of directors in 2012. Ms. Collawn joined PNM in 2007 and served as President and Chief Operating Officer and President, Utilities of PNM prior to her promotion to President and Chief Executive Officer in 2010. In addition to serving on the board of directors of PNM, Ms. Collawn has served as an independent director of CTS Corporation (a publicly traded designer and manufacturer of sensors, actuators and electronic components for various industries) since 2003, most recently serving as the Chair of the Compensation Committee and a member of the Nominating and Governance Committee. Ms. Collawn has indicated that she will not stand for re-election to the board of directors of CTS Corporation at its 2021 annual meeting of shareholders in the second quarter of 2021. Additionally, Ms. Collawn will step down as Chairman, President and Chief Executive Officer of PNM upon the closing of PNM's merger combination with Avangrid, Inc., which PNM expects to close in the second half of 2021.
Qualifications: As a senior executive in the power utilities sector for more than 25 years, Ms. Collawn has an in-depth understanding of the complex regulatory structure of the utility industry, as well as substantial operations experience, having also served as President and Chief Executive Officer of Public Service Company of Colorado, an Xcel Energy, Inc. subsidiary. Additionally, she previously served as chairman of the Electric Power Research Institute (an independent, non-profit center for public interest energy and environmental research, including sustainability and carbon reduction matters), as well as the first female chairman of the board of directors of the Edison Electric Institute (a national association of investor-owned electric companies). Along with her executive leadership experience and a focus on corporate governance, cybersecurity, and environmental and sustainability matters, Ms. Collawn brings both commercial and operational expertise through her work in the public utility sector.
Ms. Collawn is a member of the Compensation Committee and the HSSE Committee.
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4 Equitrans Midstream Corporation - 20192021 Proxy Statement3
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Margaret K. Dorman | | Age | | Director since November 2018 |
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Ms. Dormanserved as a director of EQT Corporation from January 2012 until the Separation. Ms. Dorman served as Chief Financial Officer and Treasurer of Smith International, Inc. (a publicly-tradedpublicly traded supplier of oil and gas products and services) (now part of Schlumberger Limited), between May 1999 and October 2009. Ms. Dorman has served as a director and member of the Audit Committee and Governance and Nominating Committee of Range Resources Corporation (a publicly traded petroleum and natural gas exploration and production company) since July 2019. Ms. Dorman has also been a director of privately-held Rubicon Oilfield International (provider(a privately-held provider of oilfield products and technologies) since August 2018, where she serves as chairChair of the Audit Committee and a member of the Compensation Committee. She also served as a director of EQT Corporation from January 2012 until the Separation.
Qualifications: Ms. Dorman brings to Equitrans Midstream a wealth of financial expertise and experience in the energy industry, having served in numerous financial positions with Smith International, Inc., including as the Chief Financial Officer for more than a decade, during a period of expansive growth. Previously, Ms. Dorman held management positions with Landmark Graphics, prior to its acquisition by Halliburton Corporation, and Ernst & Young LLP.EY. She has experience directing financial accounting functions, building banking relationships, structuring debt and equity financings, integrating acquisitions and interacting with shareholders as the lead investor relations executive. Ms. Dorman also has other board and audit committee experience, having served as a director of EQT as well as Hanover Compressor Company (a full service natural gas compression business) (now part of Exterran Holdings, Inc.) from February 2004 through the date of the Exterran Holdings merger in August 2007.
Ms. Dorman is Chair of the Management Development and Compensation Committee (also referred to herein as the Compensation Committee) and a member of the AuditCorporate Governance Committee.
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Thomas F. Karam | | Age | | Director since November 2018 |
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Mr. Karamwas appointed Chairman of the Board of Directors and Chief Executive Officer of Equitrans Midstream in July 2019. Prior to that, Mr. Karam served as President and Chief Executive Officer of Equitrans Midstream Corporation insince September 2018 and toa member of the Board of Equitrans Midstream insince November 2018 upon the Separation.2018. Prior to Equitrans Midstream, he was namedserved as Senior Vice President, EQT Corporation and President, Midstream infrom August 2018; serving in those capacities2018 until the Separation in November 2018. He wasMr. Karam also appointedserved as a Director and as Presidentthe Chairman and Chief Executive Officer of EQM's general partner from July 2019 until the closing of the EQM Merger in June 2020, and previously served as Chairman, President and Chief Executive Officer, from October 2018 to July 2019, and as President, Chief Executive Officer and director, from August 2018 to October 2018. In addition, Mr. Karam served as Chairman, President and Chief Executive Officer of EQGP's general partner from October 2018 through the closing of the Company's acquisition of the outstanding public common units of EQGP in January 2019, as well as President, Chief Executive Officer and director from August 2018 and became Chairman into October 2018, serving in those capacities with EQGP's general partner until the EQGP Buy-In.2018. Mr. Karam served on EQT's board of directors from November 2017 until the Separation. Mr. Karam was the founder and served as Chairman of Karbon Partners, LLC, which invests in, owns, constructs and operates midstream energy assets, from April 2017 to August 2018. Mr. Karam iswas the founder and previously served as Chairman and Chief Executive Officer of PennTex Midstream Partners, LLC,LP, a publicly traded master limited partnership with operations in North Louisiana and the Permian Basin (PennTex), from 2014 until the sale of its salegeneral partner to Energy Transfer Partners in 2016.
Qualifications: Mr. Karam has been a senior executive and entrepreneur in the midstream energy sector for more than 25 years. Preceding PennTex, he was the founder, Chairman and Chief Executive Officer of Laser Midstream Partners, LLC (Laser), one of the first independent natural gas gathering systems in the northeast Marcellus Shale, from 2010 until 2012 when it was acquired by Williams Partners. Prior to Laser, Mr. Karam was the President, Chief Operating Officer and Directordirector of Southern Union Company, where he led its successful transformation from a large LDClocal distribution company to one of the largest pipeline companies in the United States at the time. Prior to Southern Union Company, Mr. Karam was the President and Chief Executive Officer of Pennsylvania Enterprises and PG Energy, a natural gas utility in central and northeastern Pennsylvania, until its acquisition by Southern Union Company. He began his professional career in investment banking with Legg Mason Inc. and Thomson McKinnon.
Mr. Karam is a member of the Health, Safety, Security and Environmental Committee.
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| Age | | Director since | |
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Mr. PorgesLeland served as Interim Chief Executive Officer of Deltic Timber Corporation from October 2016 to March 2017, prior to the company's merger with Potlatch Corporation to form PotlatchDeltic Corporation (a publicly traded timberland real estate investment trust) (PotlatchDeltic) in February 2018. Mr. Leland has served as a director of EQT Corporation from May 2002 until the Separation. In NovemberPotlatchDeltic since February 2018 where he serves as a member of its Audit Committee and its Executive Compensation and Personnel Policies Committee. Mr. Porges was appointed Chairman of Equitrans Midstream. Mr. Porges served as Chairman and Interim President and Chief Executive Officer of EQT Corporation from March 2018 to November 2018; Executive Chairman of EQT Corporation between March 2017 and February 2018; Chairman and Chief Executive Officer, EQT Corporation, between December 2015 through February 2017; and Chairman, President and Chief Executive Officer, EQT Corporation, between May 2011 and November 2015. Mr. PorgesLeland has also served as the Chairman of the general partners of EQM and EQGP from January 2012 through October 2018 and from January 2015 through October 2018, respectively. Mr. Porges stepped down as a director of Altus Midstream Company (and its predecessor) (a publicly traded midstream company providing gathering processing and transportation services in the general partnersPermian Basin) since April 2016 where he serves as the Chair of EQMits Conflicts Committee and EQGP following the EQGP Buy-In. Mr. Porges alsoa member of its Audit Committee. Previously, he served as Chairmana director and Chair of the Audit Committee of Deltic Timber Corporation from June 2016 to February 2018 and the general partner of Rice Midstream Partners LP (RMP) from November 2017 toDecember 2014 until its merger with EQM in July 2018 when RMP was acquired by EQM.2018. Mr. Porges was the President and Chief Executive Officer of the EQGP and EQM general partners from each company's inception through February 2017.
Qualifications: Mr. Porges brings extensive business, leadership, management and financial experience, and tremendous knowledge of Equitrans Midstream's operations, culture and industry, to the Board. Mr. Porges served in a number of senior management positions with EQT, initially joining EQT as Senior Vice President and Chief Financial Officer in 1998. Prior to joining EQT, Mr. Porges held various senior positions within the investment banking industry and also held several managerial positions with Exxon Corporation (now Exxon Mobil Corporation, an international oil and gas company). Mr. Porges alsoLeland served on the board of directors of Westport Resources Corp. (anthe general partner of Oiltanking Partners, L.P. (a publicly traded company providing terminaling, storage and transportation of crude oil, refined petroleum products and natural gas productionliquefied petroleum gas) from June 2012 to February 2015 and on the board of directors of KiOR, Inc. (a publicly traded renewables fuel company) (now partfrom June 2013 to March 2015.
Qualifications: Mr. Leland brings extensive operational and financial experience in the midstream energy industry, having served as President of Anadarko Petroleum Corporation),El Paso Corporation's (El Paso) midstream business unit from April 2000 through 2004.October 2009 to May 2012, and as director of El Paso Pipeline Partners, L.P. from its formation in 2007 to May 2012. Among other senior-level roles at El Paso, Mr. Porges' strong financialLeland also previously served as Executive Vice President and industryChief Financial Officer of El Paso from August 2005 to October 2009. This experience along with his understandingas well as experience on the boards of Equitrans Midstream's business operationsnumerous publicly traded and culture, enables himprivate energy companies provide significant contributions to provide uniquethe Board.
Mr. Leland is a member of the Audit Committee and valuable perspectives on most issues facing the Company.Compensation Committee.
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Norman J. Szydlowski | | Age | | Director since November 2018 |
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Mr. Szydlowskiserved as a director of EQT Corporation from November 2017 until the Separation. Mr. Szydlowski served as President and Chief Executive Officer of SemGroup Corporation (SemGroup) (a publicly-traded midstream company that specializes in moving energy) from November 2009 through June 2014, and director of SemGroup from November 2009 through April 2014. Mr. Szydlowski served as a director of EQT from November 2017 until the Separation and as a director of the general partner of 8point3 Energy Partners, LP (a publicly traded joint venture formed to own and operate solar generation assets) from June 2015 until its acquisition by Capital Dynamics, Inc. in June 2018. He also served as a director of the general partner of JP Energy Partners LP (a publicly-tradedpublicly traded oil and natural gas company) from July 2014 through March 2017, a director of Transocean Partners, LLC (a publicly-tradedpublicly traded offshore drilling contractor) from November 2014 through December 2016, and a director of the general partner of NGL Energy Partners LP (a publicly traded company specializing in transportation, storage, blending and marketing of crude oils, natural gas, refined products, renewables and water solutions) from November 2011 through April 2014.
Qualifications: Mr. Szydlowski's experience at SemGroup and before that as Chief Executive Officer of Colonial Pipeline Company (a refined pipeline system) and elsewhere provides him with significant executive and operational midstream experience. In particular, Mr. Szydlowski has a thorough understanding of master limited partnershipsthe midstream business and midstream customers.
Mr. Szydlowski is Chair of the Health, Safety, Security and EnvironmentalHSSE Committee and a member of the Compensation Committee.
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Robert F. Vagt | | Age | | Director since November 2018 |
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Mr. Vagtserved as a director of EQT Corporation from November 2017 until the Separation. Mr. Vagt currently serves as the Lead Independent Director of Equitrans Midstream. Mr. Vagt served as President of Davidson College (an independent liberal arts college) from July 1997 through August 2007, and served as President of The Heinz Endowments (a private philanthropic foundation) from January 2008 through January 2014. Mr. Vagt served as a director of EQT from November 2017 until the Separation. Mr. Vagt was a director of Rice Energy Inc. (Rice Energy), serving as that board's independent chair, chairChair, Chair of its Health, Safety and Environmental Committee, and a member of the Audit and Nominating and Governance Committees, from January 2014 through EQT's acquisition of Rice Energy in November 2017. From January 2014 to July 2018, Mr. Vagt also served on the board of directors of RMP'sthe general partner of RMP (acquired by EQM in July 2018), serving as board chairChair from December 2014 through November 2017. Mr. Vagt has served as a director of Kinder Morgan, Inc. (a publicly-tradedpublicly traded energy infrastructure company) since May 2012, where he serves as a member of the Audit Committee and chairChair of its Environmental, Health and Safety Committee.
Qualifications: Prior to his service to The Heinz Endowments and Davidson College, Mr. Vagt had significant executive and operational oil and gas industry experience, having served as President and Chief Operating Officer of Seagull Energy Corporation (an oil and gas exploration and production company) from 1996 to 1997, as President, Chairman and Chief Executive Officer of Global Natural Resources (a producer of oil and natural gas) from 1992 to 1996 and as President and Chief Operating Officer of Adobe Resources Corporation (an oil and natural gas production company) from 1989 to 1992. Mr. Vagt also served as a director of El Paso Corporation (a provider of natural gas and related energy products) (now part of Kinder Morgan, Inc.) from May 2005 to 2012, where he was a member of the Compensation and Health, Safety and Environmental Committees. Mr. Vagt's professional background, including operations and management experience in both the public and private sectors, makes him an important advisor and member of Equitrans Midstream's Board. Mr. Vagt brings to the Board operations and management expertise in both the public and private sectors. In addition, Mr. Vagt provides the Board with diversity of perspective gained from service as the President of The Heinz Endowments, as well as from service as the President of Davidson College.
Mr. Vagt is a member of the Audit Committee, the Compensation Committee, and the Corporate Governance Committee.
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6 Equitrans Midstream Corporation - 2019 Proxy Statement
CORPORATE GOVERNANCE AND BOARD MATTERS |
Board Meetings and Committees |
The Board currently has four standing Committees: Audit, Management Development and Compensation, (Compensation), Corporate Governance, and Health, Safety, Security and Environmental. The Board may from time to time form new Committees, disband an existing Committee and delegate additional responsibilities to a Committee. Our Committees report on their activities to the Board on a routine basis and also make recommendations regarding matters to be approved by the Board. The responsibilities of the Committees are included in written charters, which were developed in connection with the Separation and will beare reviewed periodicallyat least annually by the Committees and the Board. All charters may be viewed on the Company's website at www.equitransmidstream.com by clicking on "Investors""About" on the main page and then on "Governance."
The Company does not have a formal policy of requiring its directors to attend the annual meeting, but the Company encourages them to do so. All but one of our directors, who had a previous engagement, participated in the 2020 annual meeting.
Following the November 12, 2018 Separation,In 2020, our Board held three18 meetings, with regular communication between meetings, and each of our incumbent directors serving on the Board during 2020 attended 75% or more100% of the aggregate meetings of our Board and the Committees on which he or she served. The following charts summarize each Committee's primary responsibilities, its membership and number of meetings held in 2018 following the Separation.2020.
Equitrans Midstream Corporation - 2021 Proxy Statement7
Audit Committee |
Members Kenneth M. Burke (Chair) Robert F. Vagt | Meetings Held in |
Primary Responsibilities: The Audit Committee assists the Board by overseeing:
Independence: Each member of the Committee is independent under the Company's corporate governance guidelines and applicable New York Stock Exchange (NYSE) listing standards and SEC rules. Each member of the Committee is financially literate. The Board has determined that each of Ms. Dorman and Messrs. Burke, Leland and Vagt qualify as an audit committee financial expert as defined under SEC rules. The designation as an audit committee financial expert does not impose any duties, obligations, or liabilities that are greater than those generally imposed upon a director who is a member of the Committee and the Board. As audit committee financial experts, Ms. Dorman and Messrs. Burke, Leland and Vagt also have accounting or related financial management experience under applicable NYSE listing standards.
Equitrans Midstream Corporation - 2019 Proxy Statement7
Management Development and Compensation Committee |
Members Margaret K. Dorman (Chair) Patricia K. Collawn D. Mark Leland Norman J. Szydlowski | Meetings Held in |
Primary Responsibilities: The Compensation Committee:
The Committee has the authority, in its sole discretion, to retain or obtain the advice of an independent compensation consultant, outside legal counsel or other personnel. It may also obtain advice and assistance from internal legal, accounting, human resources and other advisors. Pursuant to its Charter, the Committee may delegate authority and responsibilities to subcommittees as it deems proper provided that no subcommittee shall consist of less than two members.
Independence: Each member of the Committee must (i) meetmeets the independence requirements of the NYSE or any other national securities exchange on which the securities of the Company are listed and applicable federal securities law, including the rules and regulations of the SEC, and (ii) satisfy the requirements of an outside director for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code).SEC.
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Corporate Governance Committee |
Members Vicky A. Bailey (Chair) Sarah M. Barpoulis Kenneth M. Burke | Meetings Held in |
Primary Responsibilities: The Corporate Governance Committee is responsible for:
Independence: Each member of the Committee is independent under the Company's corporate governance guidelines and applicable NYSE listing standards.
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Health, Safety, Security and Environmental Committee |
Members Norman J. Szydlowski (Chair) Vicky A. Bailey Patricia K. Collawn | Meetings Held in |
Primary Responsibilities: The Health, Safety, Security and Environmental (HSSE)HSSE Committee:
Equitrans Midstream Corporation - 2021 Proxy Statement9
Compensation Process |
In discharging the Board's responsibilities relating to compensation of the Company's executive officers, the Compensation Committee recommends, and the Board approves, the target total direct compensation for named executive officersNEOs by establishing base salaries and setting short-term (bonus) and long-term incentive targets. This process includes consideration of the items discussed in more detail in ourthe section titled "Compensation Discussion and Analysis — Determination of Target Compensation"Total Direct Compensation (TDC)" below. When appropriate, the Compensation Committee may also provideprovides certain limited perquisites and other benefits to executive officers and other key employees.
The Compensation Committee, with the approval of the Company's Board, establishes the plan designs and performance metrics for all of the Company's short-term and long-term incentive programs. The Compensation Committee also sets target and maximum metrics and related payouts under the Company's programs for executive officers and reviews the appropriateness of these for all other Company personnel. After completion of the performance period, the Compensation Committee reviews actual performance in comparison to established metrics to determine the amount of short-term and long-term incentive awards earned for each executive officer and for other Company personnel in total.
In connection with the Separation, theThe Compensation Committee has retained the services of Mercer (US) Inc. (Mercer) as its independent consultant to aid the Compensation Committee in performing its duties. Representatives of Mercer provided the Compensation Committee with market data and counsel regarding executive officer compensation programs and practices, discussed in more detail in ourthe section titled "Compensation Discussion and Analysis" below. Representatives of Mercer do not make recommendations on, or approve, the amount of compensation for any executive officer. The Company has affirmatively determined that no conflict of interest has arisen in connection with the work of Mercer as compensation consultant for the Compensation Committee.
The Company's compensation process includes discussions among the members of the Compensation Committee, other independent directors of the Board, management and Mercer. The Compensation Committee always seeks approval of the Board with respect to the total direct compensation for each named executive officer.
Equitrans Midstream Corporation - 2019 Proxy Statement9
Certain executive officers may review information with the Compensation Committee during meetings and may present management's viewviews or recommendations. The Compensation Committee evaluates these recommendations generallyincluding, if desired, in consultation with its independent compensation consultant, and takes them into consideration when making the Compensation Committee's decisions and recommendations. When establishing total direct compensation for executive officers and reviewing actual performance against established metrics, the Compensation Committee considers the Chief Executive Officer'sCEO's compensation recommendations. The Chief Executive OfficerCEO does not participate in Compensation Committee or Board deliberations about his compensation.
TheBeginning in 2019, the Compensation Committee has delegated limited authority to Mr. Karam, in his capacity as a director of the Company, to issue special bonus payments and grant certain long-term incentive awards.awards under the Equitrans Midstream Corporation 2018 Long-Term Incentive Plan (as amended, the ETRN LTIP). These awards must follow established guidelines and(which were subsequently amended in the third quarter of 2020), are reviewed by the Compensation Committee on a quarterly basis.basis, and include New Hire, CEO, Retention and Discretionary New Hire Awards.
The Compensation Committee has approved a pre-established basket to provide for off-cycle New Hire awards pursuant to new hires eligible for an award under the 2018 Equitrans Midstream Corporation Long-Term Incentive Plan (ETRN LTIP). The guidelines are as follows:following guidelines:
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The Compensation Committee has also approved a pre-established basket to provide for CEO Awards, Retention Awards, and Discretionary New Hire Awards to individuals other than executive officers and direct reports of the Chief Executive Officer. The guidelines are as follows:CEO pursuant to the following guidelines:
The Compensation Committee has not delegated its authority to award equity to any other executive officer or CEO direct report.officer.
We provide additional information regarding the Compensation Committee and ourthe Company's policies and procedures regarding executive compensation below under the caption "Compensation Discussion and Analysis."
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Board Leadership Structure |
As described in the Company's corporate governance guidelines, the Board of Directors believes that the functions of the Chairman of the Board are distinct from those of the Chief Executive OfficerCEO but that both functions may be effectively performed by the same individual. From time to time, generally in connection with succession planning, the Board will consider whether the Chairman and the Chief Executive OfficerCEO should be separate, and if separate, whether the Chairman should be an outside director or an inside director. In connection withJuly 2019, the Separation, in November 2018, Mr. Porges was appointed as Chairman. The Board believes that having a separate Chairman is the most effective leadership structure following the Separation, enabling Mr. Karam to focus on operations and strategy while providing for robust board oversight. The Board may at some point concludeconcluded that combining the functions of Chairman and Chief Executive Officer isCEO was the most effective leadership structure.structure for the Company and appointed Mr. Karam as the Chairman of the Board. The Board reaffirmed its conclusion in May 2020 and, based on a recommendation of the Corporate Governance Committee, reappointed Mr. Karam as Chairman of the Board for a term expiring at the Board's 2021 annual meeting. The Board believes the present structure provides the Company and the Board with strong leadership and appropriate independent oversight of management, with a strong Lead Independent Director in Mr. Vagt and a board structure that is 89% independent. In addition, a combined Chairman and CEO allows the Company to communicate its business, strategy and value to shareholders, investors, employees, other stakeholders, regulators and the public with a single voice.
Under the Company's corporate governance guidelines, when the Board does not have an independent Chairman, the Board must designate an independent director as the Lead Independent Director. The Lead Independent Director's exclusive duties are described in the box on this page.
A Lead Independent Director's term is generally for one year, but an individual may serve multiple consecutive terms as ourthe Lead Independent Director if recommended by the Corporate Governance Committee and approved by the Board.
Robert F.In May 2020, the Board, based on a recommendation from the Corporate Governance Committee, re-elected Mr. Vagt was appointed to serve as Lead Independent Director of the Board in November 2018 to serve untilfor a one-year term. Mr. Vagt has held this position since the 2019 annual meeting of shareholders.Separation.
Our Lead Independent Director: |
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Board's Role in Risk Oversight |
The Board
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Audit Committee ➢ Discusses the Company's process for assessing major risk exposures and the policies management has implemented to monitor and control such exposures, including the Company's financial risk exposures, including financial statement risk and such other risk exposures as may be delegated by the Board to the Committee for oversight, and the Company's risk management policies ➢ Reviews the integrity of the Company's financial statements ➢ Reviews the qualifications, independence and performance of the Company's registered public accountants ➢ Reviews the qualifications and performance of the Company's internal audit function | | | Corporate Governance Committee ➢ Addresses governance of the Company, including its director compensation structure, that is in full compliance with law, reflects good corporate governance, encourages flexible and dynamic management without undue burdens and effectively manages the risks of the business and operations of the Company ➢ Identifies board members of the highest possible caliber to ➢ Reviews plans for management succession ➢ Reviews periodically and makes such recommendations regarding the Company's risks as may be delegated to the Committee by the Board | |
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Management Development and Compensation Committee ➢ Oversees the performance of an annual risk assessment of the Company's compensation policies and practices ➢ Reviews periodically and makes recommendations regarding the Company's risks as may be delegated to the Committee by the Board | | | Health, Safety, Security and Environmental Committee ➢ Provides input and direction to management and the Board about the Company's approach to ESG issues and HSSE policies, programs and initiatives, and reviews the Company's activities in those areas ➢ Reviews the overall adequacy of, and provides oversight with respect to, HSSE policies, programs, procedures and initiatives of the Company ➢ Reviews periodically and makes recommendations regarding the Company's risks (including, without limitation, risks relating to energy transition, emissions and climate change, as well as biodiversity matters) as may be delegated to the Committee by the Board | |
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Management
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Director Nominations |
The responsibilities of the Corporate Governance Committee include identifying and recommending to the Board for approval the requisite skills and characteristics to be found in individuals who will serve as members of the Board. The Committee strives to ensure that the Board consists of individuals from diverse educational and professional experiences and backgrounds who, collectively, provide meaningful counsel to management. The Corporate Governance Committee reviews the qualifications and backgrounds of the directors, as well as the overall composition of the Board, and recommends to the Board for approval the slate of directors to be recommended for nomination for election at ourthe Company's annual meeting of shareholders.
When assessing new director candidates for nomination, regardless of who recommends the candidate for consideration, the Corporate Governance Committee will consider the background, diversity, personal characteristics and business experience of the candidate against the ideal attributes identified below. Candidates generally possessing these attributes are further evaluated in lightagainst of the current needs of the Company to determine the appropriate fit in light of overall Board composition. The Corporate Governance Committee will reviewreviews the attributes from time to time and recommendrecommends revisions for approval by the Board as the Corporate Governance Committee considers appropriate.
The Board initiated a search for one or more new directors in the fourth quarter of 2019. While a third-party search firm was hired to identify potential director candidates, independent directors on the Board identified Mses. Barpoulis and Collawn and Mr. Leland as potential candidates and after, among other things, a thorough vetting process, interviews with the Company's entire Board and recommendations by the Corporate Governance Committee, the Board appointed Mses. Barpoulis and Collawn and Mr. Leland to the Board effective February 1, 2020, April 1, 2020 and January 30, 2020, respectively, with terms expiring at the 2020 annual meeting of shareholders, each of whom were re-elected at such meeting. With the appointment of the three new directors, the Company has expanded its Board size to nine directors, eight of whom are independent.
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As indicated in the Corporate Governance Committee's charter, the Corporate Governance Committee will consider, in its normal course, submissions from shareholders in making its recommendations for director nominees. Any shareholder desiring to recommend an individual to serve as a director of the Company should submit the information listed below to the Corporate Governance Committee Chair, care of the Corporate Secretary. The Corporate Governance Committee will consider recommendations received no earlier than the close of business on February 12, 2020December 28, 2021, and no later than the close of business on March 13, 2020.
Equitrans Midstream Corporation - 2019 Proxy Statement13
Table of ContentsJanuary 27, 2022.
A submitting shareholder must provide the following:
Additionally, as set forth in Section 1.11 of the Company's Bylaws, a shareholder, or group of twenty or fewer shareholders, in each case owning continuously for at least three years as of both the date the notice is received by the Company and the record date for the annual meeting, shares of the Company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in the Company's proxy statement director nominees constituting the greater of (i) two and (ii) 20% of the Board, provided that such nominations are submitted in writing and received by the Company's Corporate Secretary not earlier than the close of business on October 16, 2021 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting) and not later than the close of business on November 15, 2021 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior year's annual meeting) and include the following:
Please see "Corporate Secretary Contact Information" under the caption "Additional Information" on page 61.59.
Equitrans Midstream Corporation - 2021 Proxy Statement15
Contacting the Board |
Interested parties may communicate directly with the Lead Independent Director (and with independent directors, individually or as a group, through the Lead Independent Director) by sending an email | ||
to ETRNPresidingDirector@equitransmidstream.com. You may also write to the Lead Independent Director, the entire Board, any Board Committee, or any individual director by addressing such communication to the applicable director or directors, care of the Corporate Secretary, at Equitrans Midstream Corporation, |
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Governance Principles |
The Company maintains a corporate governance page on its website that includes key information about its corporate governance practices, including its corporate governance guidelines, code of business conduct and ethics, and charters for each Committee of the Audit Committee, the Compensation Committee, the Corporate Governance Committee, and the Health, Safety, Security and Environmental Committee.Board. The corporate governance page can be found at www.equitransmidstream.com, by clicking on the "Investors""About" link on the main page and then on the "Governance" link. The Company will provide copies of its corporate governance guidelines, code of business conduct and ethics, and any of the Board Committee charters upon request by a shareholder to the Corporate Secretary. See "Corporate Secretary Contact Information" under the caption "Additional Information."
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The Board is committed to strong corporate governance practices. Through the Corporate Governance Committee, the Board monitors its corporate governance policies and practices against evolving best practices. Below are highlights of some of our corporate governance policies and practices.
Corporate Governance Highlights
Equitrans Midstream Corporation - 2019 Proxy Statement15
Shareholder Engagement |
We value feedback from our shareholders and are committed to engaging in an active dialogue with our shareholders year-round. OurDuring 2020, our management team spent a significant amount of time meeting and speaking to our shareholders before and after the Separation.shareholders. We welcome feedback from our shareholders and strive to maintain the best governance, compensation and oversight practices.
Equitrans Midstream Corporation - 2021 Proxy Statement17
Sustainability and Corporate Responsibility |
We recognize, and appreciate, that our shareholders, employees, customers, regulators, and other stakeholders expect us to continue to focus on long-term sustainable performance, including by addressing significant, relevant ESG factors. We have, throughout our corporate history, embraced conducting business in a socially responsible and ethical manner by respecting all stakeholders, and we believe that our continued commitment to sustainability, including minimizing impacts to the environment and society, will enable us to create long-term value. We have highlighted below certain important steps that we have taken to further communicate, structure, and embed within our operations our sustainability practices.
More information regarding our sustainability initiatives and copies of our CSR for 2020 and Climate Policy are available on our website (www.equitransmidstream.com) by selecting the "Sustainability" tab on the main page. Information included in the CSR and Climate Policy is not incorporated into this proxy statement.
Independence and Related Person Transactions |
Director Independence |
The NYSE listing standards and our governance documents require a majority of our directors and each member of our Audit, Compensation and Corporate Governance Committees to be independent. For a director to be considered independent, the Board must annually determine that he or she has no material relationship with the Company except as a director. To assist it in determining director independence, the Board established guidelines that meet or exceed the independence requirements under the NYSE listing standards, and which are included in ourstandards. These corporate governance guidelines may be found on the Company's website at www.equitransmidstream.com.www.equitransmidstream.com by clicking on "About" on the main page and then on "Governance."
The Board considers all relevant facts and circumstances in making an independence determination. Any relationship involving a Company director that complies with the independence standards included in ourthe Company's corporate governance guidelines and is not otherwise a related person transaction under the Company's related person transaction approval policy (the related person transaction policy) is deemed to be an immaterial relationship not requiring consideration by the Board in assessing independence. In February 2019,the first quarter of 2021, our Board, in coordination with our Corporate Governance Committee, made an independence determination for each of our directors and director nominees and affirmatively determined that all of our directors and director nominees are independent, other than Messrs. Karam and Porges.Mr. Karam.
18 Equitrans Midstream Corporation - 2021 Proxy Statement
Director ownership of Company stock is encouraged and is not in itself a basis for determining that a director is not independent, provided that such ownership may preclude participation on the Audit Committee if its magnitude is sufficient to make the director an affiliated person of the Company as described in the Audit Committee charter. See "Equity-Based Compensation" under the caption "Directors' Compensation" below for a description of the equitystock ownership guidelines for directors.
Review, Approval or Ratification of Transactions with Related Persons |
Our Board has adopted a related person transaction policy. Under the policy, it is the responsibility of the Corporate Governance Committee to review Related Person Transactions (as defined below) not otherwise approved by the Board. Company management, with the assistance of the Company's legal department, is responsible for determining whether a transaction between the Company and a Related Person (as defined below) constitutes a Related Person Transaction. This determination is based on a review of the facts and circumstances regarding the transaction, including information provided in annual director and executive officer questionnaires. If it is determined that a transaction is a Related Person Transaction that has not been approved by the Board, the material facts regarding the transaction are reported to the Corporate Governance Committee for its review. The Corporate Governance Committee, thenor in certain cases the Chair of the Corporate Governance Committee followed by a report to the Corporate Governance Committee, determines whether to approve, ratify, revise, reject, or take other action with respect to the Related Person Transaction.
Under the related person transaction policy, a Related Person Transaction is generally a transaction in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and a Related Person has a direct or indirect material interest.interest in the transaction. A Related Person is generally any person who is a director or executive officer of the Company, any nominee for director, any shareholder known to the Company to be the beneficial owner of more than 5% of any class of the Company's voting securities, and any immediate family member (as defined by the SEC) of any of the foregoing persons.
16 Equitrans Midstream Corporation - 2019 Proxy Statement
Under the policy, the following transactions are deemed to be automatically pre-approved and do not need to be brought to the Corporate Governance Committee for individual approval:
Equitrans Midstream Corporation - 2021 Proxy Statement19
The related person transaction policy does not limit or affect the application of the Company's code of business conduct and ethics and related policies, which require directors and executive officers to avoid engaging in any activity or relationship that may interfere, or have the appearance of interfering, with the performance of the directors' or executive officers' duties to the Company. Such policies require all directors and executive officers to report and fully disclose the nature of any proposed conduct or transaction that involves, or could involve, a conflict of interest and to obtain approval before any action is undertaken.
Related Person Transactions with Directors and Executive Officers |
No reportable transactions between the Company and any of its directors or executive officers occurred during 2018,2020, and there are no such proposed transactions.
Related Person Transactions with EQT |
A discussion of related person transactions with EQT and EQM is attached on Appendix A.A to this Proxy Statement.
Compensation Committee Interlocks and Insider Participation |
No member of the Compensation Committee has served as an officer or employee of Equitrans Midstream at any time. During 2018,2020, no Equitrans Midstream executive officer served as a member of the compensation committee or on the board of directors of any company at which a member of Equitrans Midstream's Compensation Committee or Board of Directors served as an executive officer.
20 Equitrans Midstream Corporation - 20192021 Proxy Statement17
DIRECTORS' COMPENSATION |
The Corporate Governance Committee reviews and the Board approves director compensation on an annual basis. No compensation is paid to employee directors for their service as directors. Compensation for our non-employee directors during 2018 was established by our former parent, EQT, prior to the Separation and consisted of a mix of cash and equity-based compensation. At the effective time of the Separation, our Board approved the continuation of the same level of cash compensation for non-employee directors for the 2018 calendar year. Following the Separation, theThe Corporate Governance Committee engaged Mercer to review director compensation. Mercer performed a review of the compensation paid to our non-employee directors relative to a group of peer companies identified by Mercer and approved by the Corporate Governance Committee. In light of the non-employee directors' roles and responsibilities and after considering director compensation at relevant peer group companies, Mercer recommended the following non-employee director cash and equity-based compensation, which was approved by our Board for the 20192020 and 2021 calendar year.years.
Compensation Feature | 2018 (1) | 2019 | ||
Annual cash retainer – Board member | $85,000 | $100,000 | ||
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Annual cash retainer – Committee Chair | Audit:$25,000 Compensation:$15,000 All other Committees:$15,000 | $20,000 $20,000 $15,000 | ||
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Annual cash retainer – Committee member (excluding the chair) | Audit:$10,000 Corporate. Governance, | $7,500 None | ||
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Annual retainer – Chairman of the Board and Lead Independent Director | None | $25,000 | ||
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Meeting fees | None | None | ||
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Deferred stock units | 3,430 stock units | 7,500 stock units | ||
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Compensation Feature | 2020 | 2021 | ||
Annual cash retainer — Board member | $100,000 | $100,000 | ||
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Annual cash retainer — Committee Chair | Audit: $20,000 Compensation: $20,000 All other Committees: $15,000 | $20,000 $20,000 $15,000 | ||
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Annual cash retainer — Committee member (excluding the Chair) | Audit: $7,500 Corporate Governance, | $7,500 None | ||
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Annual retainer — Chairman of the Board and Lead Independent Director | Chairman: $0 Lead Independent Director: $25,000 | $0 $25,000 | ||
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Deferred stock units | Value equal to $150,000 | Value equal to $150,000 | ||
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Equity-Based Compensation |
Pre-Separation stock awards. EQT grantedThe Company grants to each non-employee director, on an annual basis, stock units under EQT's directors'the ETRN LTIP, the payouts of which are deferred compensation plans that vestedunder Equitrans Midstream's Amended and Restated Directors' Deferred Compensation Plan (the Director Plan). Each deferred stock unit vests upon award and will be payable upon termination of service as a director of Equitrans Midstream, which are referred to herein as deferred stock units. Each deferred stock unit was equal in value to one share of EQT common stock and does not have voting rights. Dividends are credited quarterly in the form of additional deferred stock units. Pursuant to the terms of the Separation, each outstanding EQT deferred stock unit was converted into an award in respect of both shares of EQT common stock and shares of the Company's common stock. The number of shares of EQT common stock subject to each outstanding award is the same as the number subject to the award prior to the Separation, while the number of shares of Company common stock subject to the award was determined based on the number of the Company shares distributed in connection with the Separation.
Equitrans Midstream stock awards. The Company expects to grant each non-employee director, on an annual basis, stock units under Equitrans Midstream's directors' deferred compensation plan. Each deferred stock unit vests upon award, will be payable upon termination of service as a director of Equitrans Midstream and is referred to herein as deferred stock units.Midstream. Each deferred stock unit is equal in value to one share of Equitrans Midstream common stock and does not have voting rights. DividendsThe deferred stock unit awards are automatically deferred into the Director Plan, and dividends thereon are credited quarterly in the form of additional deferred stock units.
18 Equitrans Midstream Corporation - 2019 Proxy Statement
Newly elected non-employee directors of Equitrans Midstream are generally expected to receive an equity grant upon joining the Board equal to the pro-rata amount of the then applicable annual grant. Accordingly, Mses. Barpoulis and Collawn and Mr. Leland received pro-rated grants of 14,200, 8,440, and 13,970 deferred stock units, respectively, when they joined the Board on February 1, 2020, April 1, 2020, and January 30, 2020, respectively.
Deferred Compensation |
Pre-Separation Directors' Deferred Compensation.The Company maintains the Director Plan. Under the terms of the EQT deferred compensation plans for non-employee directors, in addition to the automatic deferral of stock units awarded, non-employee directors were eligible to elect to defer up to 100% of their retainers and fees into the 2005 Directors' Deferred Compensation Plan and receive an investment return on the deferred funds as if the funds were invested in EQT common stock or permitted mutual funds. Prior to the deferral, plan participants were required to irrevocably elect to receive the deferred funds either in a lump sum or in equal annual installments. Deferred funds for which directors elected to receive an investment return as if the funds were invested in EQT common stock were payable in shares of EQT common stock. Distributions were to be made or commence following termination of service as a director. Mr. Szydlowski deferred fees under the plan in 2018 prior to the Separation.
Equitrans Midstream Directors' Deferred Compensation. Prior to the Separation, the Company established the Equitrans Midstream Corporation Directors' Deferred Compensation Plan with substantially the same terms as the EQT non-employee director compensation program immediately prior to the Separation. Each Company non-employee director who served on the EQT board of directors immediately prior to the Separation and held a deferred compensation balance under the EQT 2005 Directors' Deferred Compensation Plan was credited with such deferred compensation balance under the Equitrans Midstream Corporation Directors' Deferred Compensation Plan and ceased participation in the EQT plan with respect to future accruals; however, any phantom equity awards in respect of EQT common stock held by such director remained under the EQT plan.
Under the Equitrans Midstream Corporation Directors' Deferred CompensationDirector Plan, in addition to the automatic deferral of deferred stock units awarded,unit awards, non-employee directors are permitted to elect to defer up to 100% of their retainers and any fees into the planDirector Plan and receive an investment return on the deferred funds as if the funds were invested in Company common stock or permitted mutual funds. Prior to the deferral, plan participants are required to irrevocably elect to receive the deferred funds either in a lump sum or in equal annual installments. Deferred funds for which directors have elected to receive an investment return as if the funds were invested in Company common stock will be distributed in shares of Company common stock. Distributions will be made or, if applicable, commence following termination of service as a director. The directors' deferred compensation accounts are unsecured obligations of the Company. Mr. Szydlowski and Ms. Collawn deferred fees under the Director Plan during 2020.
Equitrans Midstream Corporation Directors' Deferred Compensation Plan after the Separation.- 2021 Proxy Statement21
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The non-employee directors are subject to equitystock ownership guidelines which require them to hold shares (or share equivalents, including deferred stock units) with a value equal to five times the annual cash retainer. Under the guidelines, directors have up to five years from joining the Board to acquire a sufficient number of shares (or share equivalents, including deferred stock units) to meet the stock ownership guidelines. In addition to Company equity, EQM units count toward satisfying the equity ownership requirement. Each of the Company's non-employee directors satisfies the equitystock ownership guidelines or is within the five-year grace period.
Equitrans Midstream Corporation - 2019 Proxy Statement19
Other |
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The table below shows the total 20182020 compensation of the Company's non-employee directors. The majority of these amounts were paid by EQT before the Separation to compensate directors who at the time served on the EQT Corporation board of directors.
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | All Other Compensation ($) (3) | Total ($) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||
Ms. Bailey | | | $ | 88,981 | | $ | 256,401 | | | $12,544 | | | $ | 357,926 | | | 115,000 | | | 150,033 | | | 79,240 | | | 344,273 | |||||
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Ms. Barpoulis | | | 91,484 | | | 137,314 | | | 13,243 | | | 242,041 | |||||||||||||||||||
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Mr. Burke | | | $ | 90,313 | | $ | 256,401 | | | $83,929 | | | $ | 430,642 | | | 120,000 | | | 150,033 | | | 178,503 | | | 448,536 | |||||
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Ms. Collawn | | | 75,000 | | | 42,453 | | | 3,913 | | | 121,366 | |||||||||||||||||||
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Ms. Dorman | | | $ | 85,897 | | $ | 256,401 | | | $44 | | | $ | 342,342 | | | 122,926 | | | 150,033 | | | 41,599 | | | 314,558 | |||||
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Mr. Karam(4) | | | – | | – | | | – | | | – | ||||||||||||||||||||
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Mr. Porges | | | $ | 11,318 | | $ | 150,140 | | | $50,000 | | | $ | 211,458 | |||||||||||||||||
Mr. Leland | | | 96,607 | | | 138,163 | | | 13,029 | | | 247,799 | |||||||||||||||||||
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Mr. Szydlowski | | | $ | 77,731 | | $ | 256,401 | | | $19,071 | | | $ | 353,203 | | | 115,000 | | | 150,033 | | | 78,858 | | | 343,891 | |||||
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Mr. Vagt | | | $ | 80,815 | | $ | 256,401 | | | $265,689 | | | $ | 602,905 | | | 132,500 | | | 150,033 | | | 78,858 | | | 361,391 | |||||
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20 Equitrans Midstream Corporation - 2019 Proxy Statement
22 Equitrans Midstream Corporation - 20192021 Proxy Statement21
EQUITY OWNERSHIP |
Stock Ownership of Significant Shareholders |
The following shareholders reported to the SEC or, in the case of the Series A Preferred Shares, to the Company, that they owned more than 5% of the Company's (i) outstanding common stock or (ii) outstanding Series A Preferred Shares as of December 31, 2018:2020:
Name and Address | Shares Beneficially Owned | Percent of Common Stock Outstanding | Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | Shares of Series A Preferred Stock Beneficially Owned | Percent of Series A Preferred Stock Outstanding | ||||||||||||||||||||||||||
EQT Corporation | | | 50,599,503 | (1) | | | 19.9 | % | | |||||||||||||||||||||||
Capital International Investors(1) | | | 49,507,028 | | | 11.4 | % | | — | | | — | | | ||||||||||||||||||
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BlackRock, Inc. | | | 19,633,390 | (2) | | | 7.7 | % | | |||||||||||||||||||||||
The Vanguard Group(2) | | | 38,925,528 | | | 9.0 | % | | — | | | — | | | ||||||||||||||||||
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The Vanguard Group | | | 18,796,741 | (3) | | | 7.39 | % | | |||||||||||||||||||||||
BlackRock, Inc.(3) | | | 36,038,222 | | | 8.3 | % | | 7,719,392 | | | 25.7 | % | | ||||||||||||||||||
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T. Rowe Price Associates, Inc. | | | 17,187,504 | (4) | | | 6.7 | % | | |||||||||||||||||||||||
EQT Corporation(4) | | | 25,296,026 | | | 5.8 | % | | — | | | — | | | ||||||||||||||||||
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GSO Equitable Finance LP | | | — | | | — | | | 7,125,591 | | | 23.7 | % | | ||||||||||||||||||
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NB Burlington Aggregator LP(5) | | | — | | | — | | | 3,752,308 | | | 12.5 | % | | ||||||||||||||||||
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CEQM Holdings, LLC | | | — | | | — | | | 2,501,537 | | | 8.3 | % | | ||||||||||||||||||
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Equitrans Midstream Corporation - 2021 Proxy Statement23
1 Lafayette Place, Greenwich, Connecticut 06830, or 601 Union Street 56th Floor, Seattle, Washington 98101. Shares shown include only the Series A Preferred Shares that are beneficially held by BlackRock, Inc. and may not incorporate all shares deemed to be beneficially held by BlackRock, Inc.
22 Equitrans Midstream Corporation - 2019 Proxy Statement
held by NB Burlington Aggregator LP.
Equity Ownership of Directors and Executive Officers |
The tablestable below provideprovides the number of shares of Company common stock and EQM common units beneficially owned by the Company's directors and named executive officersNEOs and all directors and executive officers of the Company as a group as of April 12, 2019,February 11, 2021, determined under SEC rules, which include Company shares and EQM common units they had the right to acquire within 60 days after April 12, 2019.February 11, 2021. At the close of business on April 12, 2019,February 11, 2021, Equitrans Midstream had 255,014,730433,931,154 shares of common stock outstanding and EQM had 200,457,630 common units outstanding. None of the executive officers or directors of the Company beneficially own any Series A Preferred Shares of the Company. Under SEC rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of a security, or investment power, which includes the power to dispose of or to direct the disposition of a security. Except as indicated by footnote, the persons named below have sole voting and investment power with respect to all Company common stock and EQM common units beneficially owned by them, subject to community property laws where applicable. None of the shares of Company common stock or the EQM common units are subject to a pledge.
| | Common Stock (1) | Percent of Class (2) | ||
Non-Employee Directors: | |||||
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Vicky A. Bailey | 67,852 | * | |||
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Sarah M. Barpoulis | 34,341 | * | |||
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Kenneth M. Burke | 106,181 | * | |||
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Patricia K. Collawn | 36,922 | * | |||
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Margaret K. Dorman | 112,252 | * | |||
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D. Mark Leland | 90,984 | * | |||
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Norman J. Szydlowski | 79,130 | * | |||
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Robert F. Vagt | 79,269 | * | |||
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Executive Officers: | |||||
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Thomas F. Karam(3) | 1,004,611 | * | |||
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Diana M. Charletta(4) | 194,884 | * | |||
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Stephen M. Moore | 77,251 | * | |||
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Kirk R. Oliver(5) | 99,644 | * | |||
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Brian P. Pietrandrea | 21,151 | * | |||
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Directors and Executive Officers as a Group: (13 individuals) | 2,004,472 | * | |||
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Name | | Common Stock (1) | | Exercisable Stock Options (2) | | Total Shares Beneficially Owned | Percent of Class (3) | ||||
Non-Employee Directors: | |||||||||||
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D.L. Porges(4) | 520,706 | 299,180 | 819,886 | * | |||||||
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V.A. Bailey | 28,193 | — | 28,193 | * | |||||||
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K.M. Burke | 32,193 | — | 32,193 | * | |||||||
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M.K. Dorman | 33,443 | — | 33,443 | * | |||||||
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N.J. Szydlowski | 23,057 | — | 23,057 | * | |||||||
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R.F. Vagt | 37,068 | — | 37,068 | * | |||||||
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Executive Officers: | |||||||||||
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T.F. Karam | 397,473 | — | 397,473 | * | |||||||
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D.M. Charletta(5) | 55,026 | — | 55,026 | * | |||||||
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K.R. Oliver(6) | 20,934 | — | 20,934 | * | |||||||
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C. Petrelli(7) | 51,420 | 45,045 | 96,465 | * | |||||||
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R.C. Williams | 17,025 | — | 17,025 | * | |||||||
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P.D. Swisher | 8,210 | — | 8,210 | * | |||||||
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Directors and executive officers as a group:(12 individuals) | 1,224,748 | 344,225 | 1,568,973 | * | |||||||
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24 Equitrans Midstream Corporation - 2021 Proxy Statement
26,229 deferred stock units, respectively, including accrued dividends, respectively, that will be settled in common stock in connection with the deferral of director fees, over which Messrs. PorgesMs. Collawn and Mr. Szydlowski have sole investment but no voting power prior to settlement.
Equitrans Midstream Corporation - 2019 Proxy Statement23
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Delinquent Section 16(a) |
Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange Act), requires our directors, executive officers, and anyone holding 10% or more of a registered class of our equity securities (reporting persons) to file reports with the SEC showing their holdings of, and transactions in, these securities. Based solely on a review of copies of such reports, and written representations from each reporting person that no other reports are required, we believe that for 20182020 all reporting persons filed the required reports on a timely basis under Section 16(a), except that on February 8, 2019, Mr. Swisheras follows. On June 18, 2020, EQT Corporation filed a late Form 4 amendment related to the sale of 25,299,752 shares of Equitrans Midstream common stock on March 5, 2020 to the Company pursuant to those certain Share Purchase Agreements between EQT and the Company, each dated February 26, 2020. Additionally, during 2021, Mr. Leland became aware that his investment advisor, without his knowledge, sold 127 shares of the Company's common stock held indirectly by him on February 20, 2020. Promptly after Mr. Leland became aware of the sale, a singleForm 5 reporting the transaction of 521 restricted stock units that were not reported on Mr. Swisher's initial Form 4 filed on November 12, 2018 in connection with the Separation due to an administrative error at the Company.was filed.
24 Equitrans Midstream Corporation - 20192021 Proxy Statement25
EXECUTIVE COMPENSATION INFORMATION |
COMPENSATION DISCUSSION AND ANALYSIS |
ThisOur Compensation Discussion and Analysis (CD&A) describes the objectives, principles and components of the material elements of our compensation program for the Company'sour named executive officers as determined by EQT prior to(NEOs). This CD&A focuses on the Separation on November 12, 2018programs and by the Company following the Separation. Because the Separation did not occur until November, most of therelated compensation for the Company's named executive officersour NEOs in 2018 was determined prior to the Separation under the historical compensation philosophy, programs and practices of EQT. This CD&A addresses the pre-Separation decisions made by EQT as well as the impact of the Employee Matters Agreement on named executive officer compensation. In addition, this CD&A describes the decisions made by our newly formed Management Development and Compensation Committee following the Separation on November 12, 2018 that impact both 2018 and 2019 compensation.2020.
Our 2020 Named Executive Officers |
For 2018, the Company's named executive officersAs of December 31, 2020, our NEOs were:
These named executive officers received compensation for their services only from, priorOur NEOs have significant experience in the energy industry and possess the necessary skills and business acumen to better position and grow our business as an independent midstream company.
This CD&A is divided into the Separation, EQT, and following the Separation, the Company. EQT and the Company have allocated a portion of their compensation costs to EQGP, EQM and RMP, as applicable, in accordance with agreements with those partnerships. This proxy statement sets forth the combined compensation paid by both EQT and the Company to each of the named executive officers.sections:
Prior filings with the SEC, including but not limited to, the Employee Matters Agreement by and between the Company and EQT (described below), include additional information regarding the effect
26 Equitrans Midstream Corporation - 2021 Proxy Statement
Table of the Separation on each component of compensation.Contents
Executive Summary |
COMPENSATION PHILOSOPHY AND OVERVIEW | ➢ The Management Development and Compensation Committee (and for purposes of this CD&A, the Committee) functions independently from management in determining and overseeing compensation programs and practices. ➢ The compensation program includes three key elements (base salary, annual incentives and long-term incentives) and seeks to align total direct compensation (TDC) for our NEO positions with our peers using market comparables and other relevant information. ➢ The program is designed to pay for performance and is weighted towards variable pay which requires the Company to achieve well-defined performance metrics in order for NEOs to realize performance-based annual and long-term incentives. ➢ Retirement and other benefit programs are the same for all employees and executive perquisites are limited. ➢ The program delivers transparency and fairness to shareholders, employees and other stakeholders while encouraging sound business strategy and execution that leads to long-term and sustainable shareholder value. | |
COMPANY HIGHLIGHTS IN 2020 | ➢ Executed the EQT Global GGA, which includes a 15-year contract term, significantly increases EQT's MVCs to the Company and dedicates a substantial majority of EQT's core acreage in Pennsylvania and West Virginia to the Company. ➢ Completed the final steps of the Company's plan to simplify its legal structure by consummating the EQM Merger. ➢ Published our first annual corporate sustainability report as a standalone company, and established the Board-appointment position of Chief Sustainability Officer to oversee our sustainability program, including ESG matters. ➢ In response to the COVID-19 pandemic, successfully undertook Company-wide measures to promote and maintain the safety of employees and contractors with minimal impact to the Company's operating and financial results. ➢ Delivered 2020 net income of $638 million and 2020 adjusted EBITDA of $1.2 billion. ➢ Achieved record gathered volumes of 8.2 TBtu/day during 2020, a 5% increase from 2019. ➢ Delivered an 86% reduction in our Controllable Erosion and Sediment Rate (see below) from 2019. ➢ Achieved 10% and 11% improvements in our Incidents with Serious Potential Rate (see below) and Occupational Safety and Health Administration Total Recordable Incident Rate, respectively, from 2019. ➢ Completed an EQM senior notes offering in June 2020 resulting in net proceeds of approximately $1.6 billion, which was primarily used to repay outstanding indebtedness under EQM's $3.0 billion revolver, enhancing the Company's liquidity and strengthening the Company's balance sheet. ➢ Added three new members to the Board, further diversifying the governance of our Company. | |
Equitrans Midstream Corporation - 2021 Proxy Statement27
HOW DID WE PAY OUR NEOS IN 2020? | ➢ In light of market conditions, we did not provide salary adjustments for our executives during 2020. The Committee determined existing salaries were competitive versus designated peer group positions and sufficient to retain executives in the current environment. ➢ Similarly, we did not adjust 2020 annual cash incentive targets from 2019 levels, with the exception of Mr. Pietrandrea, whose target was not competitive with peer positions. ➢ Amounts earned under the 2020 plan year for the Short-Term Incentive Plan (STIP) were based on achievement of three performance metrics: Company EBITDA (60 percent), Controllable Costs (15 percent) and health, safety and environmental (HSE) metrics (25 percent). The Company achieved a 2020 STIP payout of 170% of target, and the awards will be paid in early 2021. ➢ 2020 long-term incentive target awards (LTIP) were not adjusted from 2019 levels and were granted using a mix of three-year, performance-based restricted stock units (PRSUs) using a multi-year performance period structure and time-based restricted stock awards (RSAs), which cliff vest after three years. NEOs earn from zero to 200 percent of the target PRSUs awarded based on the relative total shareholder return (TSR) of the Company versus our TSR Peer Group (defined below), with payout capped at target in the event of a negative TSR. ➢ We did not pay any discretionary bonuses to our NEOs in 2020. ➢ Our first PRSUs as a standalone company were awarded in 2019 for the 2019-2021 period; thus, no payouts have been earned under the plan. |
This CD&A, the "Narrative Disclosure to Summary Compensation Table" and the "2020 Grants of Plan-Based Awards Table" contain references to 2020 Company EBITDA and 2020 adjusted EBITDA, financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP), which are also referred to as non-GAAP supplemental financial measures. Attached as Appendix B are reconciliations of 2020 Company EBITDA and 2020 adjusted EBITDA to 2020 Company net income, the most directly comparable GAAP financial measure, as well as other important disclosures regarding non-GAAP financial measures.
Compensation Philosophy and Practices |
In designing the 2020 compensation structure, the Committee utilized the following guidelines as the foundation for the program:
28 Equitrans Midstream Corporation - 2021 Proxy Statement
In addition to what we do and do not do, we maintain the following compensation policies to provide accountability to our Company and our shareholders:
Equitrans Midstream Corporation - 2021 Proxy Statement29
How We Determine Executive Compensation |
Compensation |
The 2018 compensation programs were designed by EQT pursuant to EQT's compensation philosophy. Accordingly, the following discussion is largely a review of those programs implemented and compensation decisions made prior to the Separation.
Subsequent to the Separation, the Equitrans Midstream board formed a Management Development and Compensation Committee. Prior to their first formal meeting in December 2018, the Committee had a number of meetings, conference calls and consultations with management, other independent directors and the independent compensation consultant (both prior to and following the Separation) which led to a significant re-design of the Company's compensation philosophy and programs for the 2019 fiscal year.
Equitrans Midstream Corporation - 2019 Proxy Statement25
The Company's core values include a commitment to safety, integrity, collaboration, transparency and excellence, and its executive compensation program is intended to promote achievement consistent with these values. The Company's executive compensation program is designed to:based on three key elements of compensation:
In summary,Each element is determined with a view of offering competitive TDC versus similar peer group positions while also providing compensation levels that aid in the Company's compensation program links pay with performance by rewarding our named executive officers whenretention of high performing executives. The following table describes each element and outlines the Company achieves strong financial and operational results.
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In 2018, the Company achieved the following performance highlights:
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In 2018, as reported by EQT, the compensation of our executive officers consisted of the following four primary components, which were established by EQT prior to the Separation:compensation.
Description | | |||||||||
Base Salary |
Fixed compensation that is reviewed annually and is based on performance, experience, responsibilities, skillset and market value. | ➢ Provide a base level of compensation that corresponds to position and responsibilities. ➢ Attract, retain, reward and motivate qualified and experienced | ||||||||
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| ➢ Incentivize executives to achieve near-term goals that ultimately contribute to long-term | | ||||||
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Long-Term Incentive Program (LTIP) | Mix of long-term target compensation consisting of PRSUs and time-based RSAs. PRSUs earned at zero to 200 percent of target units based on TSR vs. an established performance peer group over four separate performance periods with earned amounts vesting at the end of the three-year period; payouts are capped at target in the event of a negative TSR. RSAs subject to three-year cliff vesting. | ➢ ➢ Promote stability among leadership via incentives to remain with the Company ➢ Incentivize executives to achieve goals that drive Company performance over the long-term. ➢ Pay-for-performance structure that results in no payout for PRSUs in the event of poor relative performance versus peers and, | ||||||||
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A majority of our NEO compensation is at-risk and is issued in the form of both short- and long-term incentives. Individuals in a position to influence the growth of shareholder wealth have larger portions of their total compensation delivered in the form of equity-based long-term incentives. The charts below reflect the fixed and at-risk of the 2020 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) our other NEOs. The amounts for each component of TDC set forth in the charts below were calculated in accordance with SEC rules. TDC, which is not a substitute for the total compensation as reported in the Summary Compensation Table on page 39 of this proxy statement, omits certain other compensation (e.g., 401(k) contributions and perquisites) that is reflected in the Summary Compensation Table. For additional information, including information regarding how total compensation is calculated under SEC rules, see the footnotes accompanying the Summary Compensation Table.
2630 Equitrans Midstream Corporation - 20192021 Proxy Statement
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As reported by EQT, the Company's compensation program, practices and policies for 2018, as adopted by EQT prior to the Separation, were designed to drive performance and align executives' interests with those of its shareholders. Highlighted below are some of the Company's more significant practices and policies for 2018.
Equitrans Midstream Corporation - 2019 Proxy Statement27
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Determination of Target Total Direct Compensation (TDC) |
For 2018,2020, the target total direct compensation for named executive officers was established by EQT's Management Development and Compensation Committee (the EQT MDCC) prior to the Separation. Beginning in 2019, the Compensation Committee established the target total direct compensationTDC for named executive officersNEOs by establishing base salaries and setting annual and long-term incentive targets. When appropriate,targets which were then recommended to, and approved by, the Compensation Committee also provides certain limited perquisites and may make other awards. Board.
When establishing target total direct compensationTDC for each named executive officer,NEO, the Compensation Committee considers:considered:
The Compensation Committee also periodically seeks
In considering the amount and type of each component of compensation, the Compensation Committee considers the effect of each element on all other elements as well as the allocation of target total direct compensationTDC between fixed and at-risk pay as well as cash and equity. The Compensation Committee is committed to providing that a significant portion of each named executive officer'sNEO's TDC opportunity take the form of performance-based awards that only pay out upon attainment of performance goals that drive Company performance over the long-term.
As noted above, one of the several factors the Committee considers in determining TDC is the relationship of such TDC with a group of peer companies selected by the Committee in consultation with its independent compensation consultant. For 2020, the Compensation Peer Group was composed of the following eight companies that are generally similar to the Company with respect to business activity and of a similar size as measured by market capitalization, total assets and EBITDA:
➢ Crestwood Equity Partners LP | ➢ Magellan Midstream Partners, L.P. | |
➢ DCP Midstream, LP | ➢ ONEOK Inc. | |
➢ Enable Midstream Partners, LP | ➢ Targa Resources Corp. | |
➢ EnLink Midstream, LLC | ➢ Western Midstream Partners, LP |
The 2020 Compensation Peer Group was unchanged from the 2019 Compensation Peer Group other than the removal of Buckeye Partners, L.P., which was acquired in performance-based awards.the fourth quarter of 2019.
Determination of Final Total Compensation for Performance-Based Elements |
Throughout the year, the Committee reviews performance against the established STIP and LTIP program performance metrics. Once the fiscal year has ended, the Committee determines achievement of the performance goals for the STIP and, after the completion of the performance period, the applicable LTIP awards and determines the actual amount to be paid under the STIP and each PRSU award, as applicable. Our first
28 Equitrans Midstream Corporation - 20192021 Proxy Statement31
PRSUs as a standalone company were awarded in 2019 for the 2019-2021 period; thus, no payouts have been earned under the plan.
Role of Independent Compensation Consultant |
The Compensation Committee has the sole authority to hire, terminate and approve fees for compensation consultants, outside legal counsel and other advisors as it deems to be necessary to assist in the fulfillment of its responsibilities. In connection with the Separation, the CompensationThe Committee retained the services of Mercer as its independent compensation consultant to aid the Compensation Committee in performing its duties and redesigningdesigning the compensation philosophy and structure for the Equitrans Midstream organization. RepresentativesCompany. During 2020, representatives of Mercer provided the Compensation Committee with market data and counsel regarding executive officer compensation programs and practices, including specifically:
Representatives of Mercer do not make recommendations on, or approve, the amount of compensation for any executive officer. The CompanyCommittee has affirmatively determined that no conflict of interest has arisen in connection with the work of Mercer as compensation consultant for the Compensation Committee.
Shareholder Engagement and Say-on-Pay Results |
Shareholders holding over 97% of our outstanding shares voted at our 2020 annual shareholders' meeting to approve our say-on-pay proposal regarding our NEOs' 2019 compensation. Based on these results, the Committee concluded that the compensation programs and practices specifically designed to our Company's needs are in our shareholders' best interests and have strong shareholder support. Nonetheless, the Committee did undertake a thorough analysis of its compensation programs and made appropriate modifications as described below.
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The following discussion outlines the targeted 2020 executive compensation program and what we actually paid our NEOs. These compensation decisions were made in early 2020 prior to the COVID-19 pandemic. The Committee reviewed the compensation elements and determined that there was no justification for modifying the NEOs' base salaries nor the NEOs' annual or long-term incentive awards due to the ongoing COVID-19 pandemic.
2020 Base |
In 2018 priorlight of market conditions, we did not provide salary adjustments for our executives during 2020. The Committee determined existing salaries were competitive versus designated peer group positions and sufficient to retain executives in the Separation, EQT set the base salary for all of the named executive officers. Following the Separation, the Compensation Committee approved the base salaries set forth below for each of the named executive officers, effective as of November 17, 2018:current environment.
Name | Title | Base Salary | | |||||
Thomas F. Karam | $675,000 | |||||||
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| Kirk R. Oliver | Senior Vice President and Chief Financial Officer | $500,000 | | ||||
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Diana M. Charletta | $ | |||||||
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| Senior Vice President and | $ | | |||||
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Vice President and | $ | |||||||
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The Compensation Committee anticipates that base salaries will be considered and, where appropriate, ordinarily adjusted towards the beginning of each calendar year.
32 Equitrans Midstream Corporation - 20192021 Proxy Statement29
2020 Annual Incentives (STIP)
Our STIP focuses our NEOs' attention to achieving key near-term goals that drive long-term performance for our Company. In 2020, our STIP's performance goals and results were as shown:
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In connection withdesigning the Separation,STIP for 2020, our Committee determined that Company EBITDA, Controllable Costs and pursuantHSE performance metrics were key drivers to the Employee Matters Agreement, the short-term incentive awards previously grantedsuccessful execution of our business, but recommended to the Company's employees by EQT pursuantBoard that the weighting of Company EBITDA be increased to the EQT short-term incentive
compensation plans (including the underlying performance goals) remained in place60% for 2018. The EQT performance metrics included the following:
For our named executive officers other than Mr. Karam, the Compensation Committee and Mr. Karam conducted a review of each officer's performance. Mr. Karam also provided a self-assessment to the Compensation Committee to assist its review of his performance pursuant to the EQT short-term incentive plans. Based on these reviews, the successful planning and execution of the Separation,2020 (from 50% for 2019) and the significant additional executive teamweighting of Controllable Costs be correspondingly decreased to 15% for 2020 (from 25% for 2019) in order to emphasize and prioritize near-term performance highlights outlined inobjectives for the table below, the Compensation Committee determined it was appropriate to increase the aggregate annual incentive amount by $0.2 million. From this aggregate bonus amount, the Compensation Committee recommended, and the Board approved, the following specific annual bonus payments for 2018 under the EQT short-term incentive plans for each named executive officer:
30 Equitrans Midstream Corporation - 2019 Proxy Statement
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EQT reported that in January 2018, prior to the Separation, the EQT MDCC awarded long-term incentives to each of Ms. Charletta and Messrs. Williams and Swisher, pursuant to the EQT Corporation 2014 Long-Term Incentive Plan (the EQT LTIP). In addition, EQT reported that, in August 2018 and September 2018 prior to the Separation, the EQT MDCC awarded long-term incentives to Mr. Karam and Mr. Oliver, respectively, pursuant to the EQT LTIP. In developing EQT's 2018 long-term incentive program, EQT reported that the EQT MDCC designed a program it believed would align the interests of the named executive officers with the interests of its shareholders, drive appropriate performance, be market competitive, promote retention, be tax efficient, minimize earnings volatility and result in a portfolio approach to performance metrics. The table below sets forth the types and amounts of awards received by each named executive officer under the EQT LTIP during 2018. A detailed description of the terms of each type of EQT award is included in the sections that follow.
| | | | EQT LTIP Award | | | |||||||||||||
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Name | | Restricted Shares | | Restricted Stock Units | | SIA Restricted Stock Units | | IPSUP Perf. Share Units | | Value Driver Perf. Share Units | | ||||||||
Thomas F. Karam | 59,340 | — | — | — | — | ||||||||||||||
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| Kirk R. Oliver | | — | | 8,710 | | — | | — | | — | | |||||||
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Diana M. Charletta | — | 2,070 | — | 2,070 | 4,140 | ||||||||||||||
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| Phillip D. Swisher | | — | | 550 | | 650 | | 550 | | 1,100 | | |||||||
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Robert C. Williams | — | 1,360 | — | 1,360 | 2,720 | ||||||||||||||
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Effective upon the Separation and pursuant to the Employee Matters Agreement, each award under the EQT LTIP was converted into two separate awards — a post-Separation EQT award and a Company award. Both the post-Separation EQT award and the Company award remained subject to the same terms and conditions (including with respect to vesting) after the conversion; provided that, after the conversion, (i) the number of shares subject to the post-Separation EQT award was equal to the number of EQT shares subject to such award immediately prior to the conversion, (ii) the number of shares subject to the Company award was equal to the number of EQT shares subject to such award immediately prior to the conversion, multiplied by a distribution ratio, and (iii) service requirements may be satisfied by service with the Company.
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The restricted shares granted by the EQT MDCC in August 2018 to Mr. Karam will vest on the third anniversary of the grant date thereof, contingent upon continued service with the Company through such date.
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The restricted stock units granted by the EQT MDCC to Ms. Charletta and Messrs. Swisher and Williams in January 2018 will vest on January 1, 2021, contingent upon continued service with the Company through such date, and be payable in cash. The restricted stock units granted to Mr. Oliver in September 2018 will vest on September 10, 2021, contingent upon continued service with the Company through such date, and be payable in cash.
Equitrans Midstream Corporation - 2019 Proxy Statement31
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EQT reported that the EQT 2018 Incentive Performance Share Unit Program (IPSUP) was designed to drive long-term value directly related to EQT production efficiency by using operating efficiency, development efficiency and return on capital employed as well as relative total shareholder return (TSR) performance as performance metrics over the period beginning January 1, 2018 and ending December 31, 2020. Under the EQT 2018 IPSUP, each participant can earn up to a maximum of three times his or her target award.
EQT also reported that, as a result, the performance measures and their weighting under the EQT 2018 IPSUP were based on EQT's performance over the period January 1, 2018 through December 31, 2020 as follows:
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Key business indicator used by management and our investors to evaluate overall performance. | ||||||||
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| Controllable Costs | • Evaluates how well we manage our costs. | ✓ Focuses attention on expenses that can erode earnings and drives overall culture of cost control. | | ||||
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Health, Safety and Environmental | • Determines performance against stringent safety and environmental goals. | ✓ Promotes a culture where safety, health and the environment is embedded into all aspects of our decision-making. | ||||||
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Effective
2020 STIP Performance | ||||||||||||||||||||||||
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Category | Metric | | Weight | | Threshold (50%) | | Target (100%) | | Maximum (200%) | | 2020 Results | | 2020 Payout | | ||||||||||
Financial | Company EBITDA | 60 | % | $ | 1,066 | (1) | $ | 1,171 | (1) | $ | 1,276 | (1) | $ | 1,228 | (2) | 155 | % | |||||||
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($ in millions) | Controllable Costs | 15 | % | $ | 332 | $ | 305 | $ | 278 | $ | 282 | (3) | 184 | % | ||||||||||
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ISP | 10 | % | 1.43 | 1.17 | 0.91 | 0.84 | ||||||||||||||||||
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HSE(4) | Adj. ISP | 5 | % | If Actual Rate '0' — Matches ISP Rate Payout | 0 | 200 | % | |||||||||||||||||
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Controllable Erosion and Sediment Rate | 10 | % | 0.50 | 0.41 | 0.36 | 0.02 | ||||||||||||||||||
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Total 2020 STIP Payout | 170 | % | ||||||||||||||||||||||
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Equitrans Midstream Corporation - 2021 Proxy Statement33
2020 performance metrics, this would have resulted in an unintended increase to the 2020 STIP payout from 170% to 196% of the target payout, or an increase in the aggregate 2020 STIP payout of approximately $5 million. As a result, on July 22, 2020, the Board, following the recommendation thereof from the Committee as well as the Company's senior management team, equitably adjusted "Threshold," "Target" and "Maximum" amounts for the Company's 2020 Company EBITDA performance metric under the STIP to remove the impact of the approximately $89 million change in the deferred revenue forecast from the approved 2020 performance metrics. In addition, the Board, following the recommendation of the Committee, determined to adjust the STIP to remove the impact of any future changes in deferred revenue from the Company EBITDA metric because the Company's employees have no control over changes to the estimated deferred revenue amounts resulting from certain provisions within the EQT Global GGA.
2020 NEO STIP Opportunities and Payments |
The Board, upon recommendation of the Committee, made no adjustments to the target percentages for the NEOs' short-term incentive plan opportunities for the 2020 plan year, other than Mr. Pietrandrea's short-term incentive plan opportunity. The Board, upon recommendation of the Committee, increased Mr. Pietrandrea's target short-term incentive opportunity by approximately 17% to $100,800 to better align his target with the market median. The NEOs' short-term incentive opportunities for 2020 were as follows:
| NEO | | Threshold | | Target | | Maximum | | 2020 STIP Award Earned | | ||||||
| Thomas F. Karam | $ | 337,500 | $ | 675,000 | $ | 1,350,000 | $ | 1,147,500 | |||||||
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| Kirk R. Oliver | $ | 225,000 | $ | 450,000 | $ | 900,000 | $ | 765,000 | | ||||||
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| Diana M. Charletta | $ | 225,000 | $ | 450,000 | $ | 900,000 | $ | 765,000 | |||||||
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| Stephen M. Moore | $ | 150,000 | $ | 300,000 | $ | 600,000 | $ | 510,000 | | ||||||
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| Brian P. Pietrandrea | $ | 50,400 | $ | 100,800 | $ | 201,600 | $ | 171,360 | |||||||
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STIP payouts are prorated for the portion of the year an individual is employed and based on actual performance achievement. Additionally, in the event of death, disability, qualifying retirement or change in control, the STIP would provide a prorated payout. Amounts would be forfeited in all other separation scenarios. The Committee has the authority to make exceptions to the treatment of payouts under the STIP.
34 Equitrans Midstream Corporation - 2021 Proxy Statement
Long-Term Incentive Program (LTIP)
Our LTIP aligns our NEOs' interests with those of our shareholders by providing the opportunity to earn incentive compensation based on the Company's long-term success.
Both RSAs and PRSUs awarded to our NEOs are paid in Company stock, further aligning their interests with those of our shareholders.
Time-Based RSAs |
The time-based RSAs issued under the 2020 LTIP program cliff vest after three years of continuous service following the vesting commencement date, which was January 1, 2020. The grant of time-based RSAs helps align our NEOs' interests with those of our shareholders and provides a powerful retention incentive that assists us in maintaining continuity among our senior executive team.
Performance-Based RSUs (PRSUs) |
For purposes of the 2020 LTIP, the Committee continued to refine the performance-based aspects of the incentive structure instituted following the Company's Separation from EQT. The Committee, with input from other members of the Board and the Committee's independent compensation consultant, undertook a thorough review of the design and performance metrics used for the Company's performance-based program. The Committee elected to eliminate the Cumulative TSR Per Share metric used in 2019, as the primary driver (i.e., share price) was already reflected in the existing Relative TSR metric. The Committee also implemented a multi-year performance period structure that the Committee believed would enhance the retentive effect of the program and incorporated a negative TSR cap for the 2020 long-term incentive program. The Committee believed that the ability for employees to earn a portion of the PRSUs each year, based on the Company's Relative TSR performance, enhanced the award's retention element, while providing that the largest incremental portion of the program weighted towards a three-year performance period continued to emphasize the importance of delivering long-term value creation for the Company's shareholders. All PRSUs are eligible to vest, to the extent earned, at the end of the three-year period. The Committee recommended, and the Board approved, the above modifications for the 2020 long-term performance-based incentive design.
The PRSUs issued under the 2020 LTIP program may be earned over four separate performance periods as follows: (i) 20% for each of the three calendar years that occur following the vesting commencement date (i.e., the 2020, 2021 and 2022 calendar years) and (ii) 40% for the cumulative three-year period following the vesting commencement date (i.e., January 1, 2020 through December 31, 2022) (such three-year period, the cumulative performance period). All payouts for the PRSUs are contingent on continued employment over the full three-year performance period and are paid following the Committee's certification of results following the end of such performance period.
By basing our PRSUs on Relative TSR performance over the 2020-2022 performance period, we align our NEOs' interests with those of our shareholders by tying compensation outcomes to our performance relative to our TSR Peer Group and to delivering shareholder value.
Equitrans Midstream Corporation - 2021 Proxy Statement35
The table below summarizes the Relative TSR performance goals and potential payouts for each of the four performance periods:
| | 2020-2022 PRSUs — Relative TSR* | | |||||
| Threshold | Target | Maximum | | ||||
| 25th Percentile | | 50th Percentile | | 75th Percentile or Above | | ||
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| 50% Payout | | 100% Payout | | 200% Payout | | ||
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* | TSR performance between points will be determined by straight-line interpolation. In the event that the Company's TSR is negative for any one of the four performance periods, the payout will not exceed 100% of target for such performance period notwithstanding performance above target. |
Our 2020 TSR Peer Group consists of a subset of similarly-sized C-corporations with market values in excess of $2 billion included in the Alerian US Midstream Energy Index (AMUS), as well as all members of the Compensation Peer Group. The Committee selected the TSR Peer Group in consultation with Mercer, its independent compensation consultant. The 2020 TSR Peer Group represents a decrease in peer companies from our 2019 peer group, based upon market consolidation, as well as, a selection of companies that the Committee believes are more aligned with the Company's corporate structure and dividend policy following the EQM Merger. The Committee believes this larger peer group (as compared to the Compensation Peer Group) is appropriate as it represents the companies with which the Company competes for investment purposes.
➢ Antero Midstream Corporation | ➢ Kinder Morgan, Inc. | |
➢ Cheniere Energy, Inc. | ➢ Magellan Midstream Partners, L.P. | |
➢ Crestwood Equity Partners LP | ➢ ONEOK Inc. | |
➢ DCP Midstream, LP | ➢ Targa Resources Corp. | |
➢ Enable Midstream Partners, LP | ➢ The Williams Companies, Inc. | |
➢ EnLink Midstream, LLC | ➢ Western Midstream Partners, LP |
To determine Relative TSR we utilize the 15-day average closing price of our stock prior to the beginning of the respective performance period and the 15-day average closing price of our stock at the end of the respective performance period to determine Relative TSR.
The target long-term incentive awards to the NEOs were made consistent with the Committee's methodology described above and were unchanged from the target long-term incentive awards (by dollar value) approved for the NEOs in 2019. The number of RSAs and PRSUs awarded to the NEOs were as follows:
| NEO | | 2020 Time-Based RSAs Awarded | | 2020 PRSUs Awarded | | ||||
| Thomas F. Karam | 121,260 | 181,890 | |||||||
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| Kirk R. Oliver | | 23,960 | | 35,930 | | ||||
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| Diana M. Charletta | 40,420 | 60,630 | |||||||
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| Stephen M. Moore | | 21,670 | | 32,510 | | ||||
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| Brian P. Pietrandrea | 5,970 | 8,960 | |||||||
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EQT 2018 IPSUP Long-Term Incentive Awards |
In February 2021, the Committee certified the performance for the two-thirds of the EQT 2018 Incentive Performance Share Unit Program (EQT 2018 IPSUP) award component that was subject to performance goals established by our Board, upon recommendation of our Committee.
The remaining one-third of the EQT 2018 IPSUP performance share unitsshares remained subject to and were earned based on actual performance as of EQT for the period beginning January 1, 2018 and ended on December 31, 2018.
36 Equitrans Midstream Corporation - 2021 Proxy Statement
Our Committee had no involvement in the setting of performance goals for the one-third portion of the EQT 2018 with respectIPSUP that is attributable to the performance measures described above, subject to continued employment with2018 calendar year or the Company. Of the remaining two-thirds of the EQT 2018 IPSUP award component that was subject to performance share units, andgoals established by EQT; however, as a result of the Separation, it certifies performance achievement pursuant to the applicable plan documents and an Employee Matters Agreement, the post-Separation EQT award component will be earned based on new performance goals related to EQT performancedated November 12, 2018, between us and the Company award component will be earned based on new performance goals related to Company performance, each for the period beginning January 1, 2019 and ending December 31, 2020.EQT.
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EQT reported that the EQT 2018 Value Driver Performance Share Unit Award (VDA) was designed to drive the focus of next tier senior leadership on activities aligned with EQT's business plan and on EQT business unit and individual value drivers considered critical to EQT's long-term success.
Effective as of the Separation, pursuant to the Employee Matters Agreement, the EBITDA goal for the EQT 2018 VDA performance share units was deemed satisfied. In addition, the satisfaction of the business unit value drivers and other applicable performance goals was determined pursuant to the terms of the program adopted by the EQT MDCC, based on actual performance as of the earlier of December 31, 2018 or the last date performance could be determined for the post-Separation EQT award component and as of September 30, 2018 for the Company award component. One-half of the EQT 2018 VDA was confirmed and paid in cash in the first quarter of 2019, and the remaining one-half will be confirmed and vest upon payment in cash in the first quarter of 2020, subject in each case to continued employment with the Company.
32 Equitrans Midstream Corporation - 2019 Proxy Statement
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The Separation was an extraordinarily complex transaction, and EQT reported that the EQT MDCC determined it was important to have a stable, focused and experienced leadership team throughout this process. Accordingly, in recognition of the management team's efforts and to incentivize future efforts, EQT reported that the EQT MDCC approved a Strategic Implementation Award (SIA) for certain members of the management team, including Mr. Swisher, in March 2018. The Strategic Implementation Award for Mr. Swisher included the following components:
Pursuant to the terms of the program adopted by the EQT MDCC, the cash award vested and was paid upon grant in March 2018. One-half of the SIA restricted stock units vested on the first anniversary of the grant date and the remaining one-half will vest on the second anniversary of the grant date, subject to continued employment with the Company. Mr. Swisher received the following grants under the SIA program:
| Name | Cash | RSUs | | ||||
| Phillip D. Swisher | $16,667 | 650 | |||||
| | | | | | | | |
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As noted above, Ms. Petrelli is the Company's former Senior Vice President and Chief Administrative Officer. Ms. Petrelli's employment with the Company terminated effective December 13, 2018. The Company previously entered into a transition agreement andIn general, release with Ms. Petrelli in order to provide for a smooth and orderly succession, have Ms. Petrelli release any claims against the Company and ensure her adherence to restrictive covenants that protect the Company.
In 2018, prior to the Separation, EQT awarded Ms. Petrelli 16,000 stock options, 4,780 shares of restricted stock, 9,550 performance share units under the 2018 IPSUP, and 6,710 performance share units and a cash payment of $166,667 under the SIA. Effective upon the Separation, the Company maintained Ms. Petrelli's annual base salary at $272,635. For additional information regarding the treatment of these awards and the payments Ms. Petrelli received in connection with her termination, which was determined in accordance with an agreement assumed by the Company in connection with the Separation, please see "Payments Upon Termination of Employment or a Change of Control" below.
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Following the Separation, the named executive officersour NEOs participate in the same retirement and health and welfare benefit plans offered to other Company employees, including medical, prescription drug, dental, vision, short- and long-term disability, wellness and employee assistance programs.employees. The same contribution amounts, deductibles and plan design provisions are generally applicable to all employees.
Stock Ownership Guidelines |
Equitrans Midstream Corporation - 2019 Proxy Statement33
TableThe NEOs are subject to stock ownership guidelines requiring each NEO to hold a specified multiple of Contentsthe NEO's base salary (five times for the CEO and three times for all other NEOs). The NEOs are required to meet the ownership guidelines within a reasonable period of time from becoming an NEO; provided, however, in the event the individual ownership guidelines are not met within a five-year period, the net shares acquired through incentive compensation plans must be retained. As of December 31, 2020, Mr. Karam met his ownership guidelines, as his Company stock holdings represented approximately 10 times his base salary. Our remaining NEOs are on track to satisfy the guidelines within the prescribed time period.
Retirement Program |
Following the Separation, the named executive officersOur NEOs participate in the same defined contribution 401(k) plan as all other Company employees. The Company typically contributesDuring 2020, we contributed an amount equal to 6% of each participant's base salary and annual incentive award to an individual investment account for theeach employee subject(subject to applicable tax regulations. In addition, the Company matches aInternal Revenue Service (IRS) regulations).
We also match every participant's elective contributiondeferral contributions by contributing to the participant's individual investment account an amount equal to 50% of each dollar contributed, by the employee, subject to a maximum Company matching contribution of 3% of the employee's base salary and to applicable tax regulations.
Pursuant to the terms of the Payroll Deduction and Contribution Program assumed by the Company in connection with the Separation, the Company also contributed an amount equal to 11% of Mr. Karam's annual incentive awardawards (subject to IRS regulations).
We do not provide separate executive retirement benefits for 2018 onour NEOs.
Health Benefits |
Our NEOs participate in the same health and welfare benefit plans as all other Company employees. We provide medical, prescription drug, dental, vision, short- and long-term disability, wellness and employee assistance programs. We also provide our NEOs and certain other senior members of management with access to an after-tax basis throughannual executive physical and modest additional life / accidental death & dismemberment insurance coverage reflecting their compensation levels. NEOs pay the purchase of a retirement annuity product. The after-tax annuity program contains no vesting requirements. In 2019,same health benefit contribution amounts and have the Compensation Committee discontinued this annual incentive award component of this program.same deductibles as applicable to all other Company employees.
Limited Perquisites |
EQT previously offeredThe perquisites program provides an executive physical and access to certaina concierge medical program as well as an annual stipend to offset the cost of financial planning services. Beginning in 2020, Mr. Karam also was reimbursed for a one-time club initiation fee as well as the costs of his 2020 monthly dues. The Company reflected the entire cost of the EQT named executive officersmembership, including the following: a car allowance, a country clubinitiation fee and a dining club membership, executive physical (including preferred access to healthcare professionals and related services formonthly dues in the executive and, in certain cases, his/her spouse), financial planning, life insurance and accidental death and disability insurance (both of which exceed the level of insurance provided to other employees), andde minimis personal usage of EQT purchased event tickets and parking.
With the assistance of Mercer, in connection with its reviewSummary Compensation Table below. However, Mr. Karam's use of the Company's compensation philosophyclub is primarily for businesses purposes, and structure, the Compensation Committee reviewed the perquisites historically provided by EQT. Consistent with its philosophy of pay for performance, following the Separation, the Company therefore believes that only provides modest perquisites to its named executive officers that, in number and value, are below median competitive levels fora portion of the peer group.
cost represents a perquisite. See footnote (4)(3) to the Summary Compensation Table below for a discussion of the perquisites provided to the named executive officers in 2018.
during 2020.
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On January 15, 2019,In early 2021, members of the Company entered into an amended and restated confidentiality, non-solicitation and non-competition agreement with Ms. Charletta. This amended and restated agreement supersedes her prior agreement that was assigned to the Company in connectionCompany's management, with the Separation. Among other things, this amended and restated agreement (i) subjects Ms. Charletta to non-competition, non-solicitation, and other restrictive covenants and (ii) providesassistance of the Committee's independent compensation consultant, reviewed the risk assessment of the Company's compensation programs for certain severance payments and benefits in the event of a termination of employment by the Company without "cause" or by Ms. Charletta for "good reason", all of which are consistent with the payments and benefits described below for Messrs. Karam and Oliver.
Mr. Williams' employment with the Company ended on March 28, 2019. We entered into an offer letter and a confidentiality, non-solicitation and non-competition agreement with a new Senior Vice President and General Counsel, Mr. Stephen M. Moore, effective April 15, 2019. Among other things, this confidentiality, non-solicitation and non-competition agreement (i) subjects Mr. Moore to non-competition, non-solicitation, and other restrictive covenants and (ii) provides for certain severance payments and benefits in the event of a termination of employment by the Company without "cause" or by Mr. Moore for "good reason", all of which are also consistent with the payments and benefits described below for Messrs. Karam and Oliver.
34 Equitrans Midstream Corporation - 20192021 Proxy Statement37
As mentioned above, in addition to its first formal meeting in December 2018, the Committee had a number of meetings, conference calls and consultations with management, other independent directors and the independent compensation consultant (both prior to and following the Separation) which led to a significant re-design of the Company's compensation philosophy and programs for the 2019 fiscal year.
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Disclosures in this proxy statement may contain certain forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as "anticipate," "estimate," "approximate," "expect," "intend," "plan," "believe" and other words of similar meaning in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this proxy statement include the matters discussed regarding the expectation of performance under compensation plans, anticipated financial and operational performance of the Company and its subsidiaries. These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and are beyond the Company's control. The risks and uncertainties that may affect the operations, performance and results of the Company's business and forward-looking statements include, but are not limited to, those set forth in the Company's annual report on Form 10-K for the year ended December 31, 2018.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not intend to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.
The "Narrative Disclosure to Summary Compensation Table" and "2018 Grants of Plan-Based Awards Table" and the "CD&A" contain references to 2018 adjusted midstream EBITDA, a financial measure that has not been calculated in accordance with generally accepted accounting principles (GAAP), which is also referred to as a non-GAAP supplemental financial measure. Attached as Appendix B is a reconciliation of 2018 adjusted midstream EBITDA to net income, the most directly comparable GAAP financial measure, as well as other important disclosures regarding non-GAAP financial measures.
Equitrans Midstream Corporation - 2019 Proxy Statement35
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We have reviewed and discussed the CD&A with the Company's management. Based on our review and discussions, we recommended to the Board of Directors that the CD&A be included in the Equitrans Midstream Corporation Proxy Statement for 2019.
This report is not soliciting material, is not deemed to be filed with the SEC and is not to be incorporated by reference in any filing of Equitrans Midstream Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
This report has been furnished by the Management Development and Compensation Committeeof the Board of Directors.
Margaret K. Dorman, ChairNorman J. SzydlowskiRobert F. Vagt
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Culminating in early 2019, members of the Company's management, with the assistance of the Compensation Committee's independent compensation consultant, conducted a risk assessment of the Company's compensation programs for all employees. The results of such assessment were presented to the Compensation Committee. Based on the assessment, the Company and the Compensation Committee believe that the Company's compensation programs are balanced and do not create risks reasonably likely to have a material adverse impact on the Company.
Agreements with the Named Executive Officers |
36 Equitrans Midstream Corporation - 2019 Proxy StatementThe Committee believes that severance protections play a valuable role in attracting, motivating and retaining highly talented executives. Accordingly, we provide such protections for the NEOs under their agreements that are described in detail under the caption "Potential Payments Upon Termination or Change of Control" below. Importantly, the executive agreements include covenants not to solicit employees, customers, potential customers, vendors or independent contractors from, or, with respect to all NEOs except Mr. Pietrandrea, compete with, the Company for a specified period of time and to maintain the confidentiality of the Company's information. The Committee believes that these covenants are extremely valuable to the Company.
As explained below, in March 2020 the Company replaced Mr. Pietrandrea's existing confidentiality, non-solicitation and non-competition agreement with a confidentiality, non-solicitation and change of control agreement in connection with a holistic review of all of our agreements with our executive officers. See "Potential Payments Upon Termination or Change of Control" below for additional information on Mr. Pietrandrea's confidentiality, non-solicitation and change of control agreement.
Report of the Management Development and Compensation Committee |
We have reviewed and discussed the CD&A with the Company's management. Based on our review and discussions, we recommend to the Board of ContentsDirectors that the CD&A be included in the Equitrans Midstream Corporation Proxy Statement for 2021.
This report has been furnished by the Management Development and Compensation Committee
of the Board of Directors.
Margaret K. Dorman, Chair
Patricia K. Collawn
D. Mark Leland
Norman J. Szydlowski
EXECUTIVE COMPENSATION TABLES |
The following tables reflect the compensation of the Company's named executive officers.NEOs. The information set forth below with respect to the period prior to the Separation and years ended December 31, 2017 and 2016 is historical EQT compensation. This historical EQT compensation, which was, as applicable, approved by the EQT Corporation Management Development and Compensation Committee, has been provided by, or derived from information provided by, EQT and reflects compensation earned during 2018 prior to the Separation and for the years ended December 31, 2017 and 2016 based upon services performed during such periods. The Company provided the compensation information for periods following the Separation in 2018, most of which was attributable to EQT programprograms assumed by the Company as a result of the Separation. See "Compensation DiscussionSeparation, and Analysis" for 2019 and 2020, which reflects the Company's own compensation program as an explanationindependent company.
38 Equitrans Midstream Corporation - 2021 Proxy Statement
Table of our compensation philosophy and program following the Separation.Contents
Summary Compensation Table |
The table below sets forth the compensation earned by or paid to our named executive officersNEOs during the fiscal years ended December 31, 2020, 2019, and 2018, 2017, and 2016.as applicable.
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (4) | Total ($) | | | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||
| Thomas F. Karam | | 2018 | | 212,308 | | 267,000 | | 3,000,230 | | — | | | — | | | 205,941 | | | 3,685,479 | | | Thomas F. Karam | | | 2020 | | | 675,000 | | — | | 2,636,435 | | | 1,147,500 | | | 203,759 | | | 4,662,694 | | ||||||||||||||||||||
| President and Chief | | 2017 | | — | | — | | — | | — | | | — | | | — | | | — | | | Chairman and Chief | | | 2019 | | | 680,769 | | — | | 3,251,737 | | | 1,035,057 | | | 45,659 | | | 5,013,222 | | ||||||||||||||||||||
| Executive Officer | | 2016 | | — | | — | | — | | — | | | — | | | — | | | — | | | Executive Officer | | | 2018 | | | 212,308 | | 267,000 | | 3,000,230 | | | — | | | 205,941 | | | 3,685,479 | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||
| | Kirk R. Oliver | | 2018 | | 134,616 | | 20,000 | | 405,538 | | — | | | — | | | 10,189 | | | 570,343 | | | | Kirk R. Oliver | | | 2020 | | | 500,001 | | — | | 520,883 | | | 765,000 | | | 44,772 | | | 1,830,656 | | | |||||||||||||||||
| | Senior Vice President | | 2017 | | — | | — | | — | | — | | | — | | | — | | | — | | | | Senior Vice President | | | 2019 | | | 500,001 | | — | | 642,317 | | | 693,000 | | | 44,500 | | | 1,879,818 | | | |||||||||||||||||
| | and Chief Financial Officer | | 2016 | | — | | — | | — | | — | | | — | | | — | | | — | | | | and Chief Financial Officer | | | 2018 | | | 134,616 | | 20,000 | | 405,538 | | | — | | | 10,189 | | | 570,343 | | | |||||||||||||||||
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| Diana M. Charletta | | 2018 | | 283,167 | | 321,040 | | 510,890 | | — | | | — | | | 36,017 | | | 1,151,114 | | | Diana M. Charletta | | | 2020 | | | 450,000 | | — | | 878,811 | | | 765,000 | | | 44,656 | | | 2,138,467 | | ||||||||||||||||||||
| Executive Vice President | | 2017 | | 270,150 | | — | | 499,170 | | — | | | 220,900 | | | 35,716 | | | 1,025,936 | | | President and Chief | | | 2019 | | | 429,940 | | — | | 963,476 | | | 641,812 | | | 44,371 | | | 2,079,599 | | ||||||||||||||||||||
| and Chief Operating Officer | | 2016 | | 262,101 | | — | | 411,151 | | — | | | 218,000 | | | 30,605 | | | 921,857 | | | Operating Officer | | | 2018 | | | 283,167 | | 321,040 | | 510,890 | | | — | | | 36,017 | | | 1,151,114 | | ||||||||||||||||||||
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| | Phillip D. Swisher | | 2018 | | 203,462 | | 167,748 | | 166,892 | | — | | | — | | | 18,794 | | | 556,896 | | | | Stephen M. Moore | | | 2020 | | | 375,001 | | — | | 471,177 | | | 510,000 | | | 44,487 | | | 1,400,665 | | | |||||||||||||||||
| | Vice President and | | 2017 | | — | | — | | — | | — | | | — | | | — | | | — | | | | Senior Vice President | | | 2019 | | | 252,405 | | — | | 596,994 | | | 462,000 | | | 23,378 | | | 1,334,777 | | | |||||||||||||||||
| | Chief Accounting Officer | | 2016 | | — | | — | | — | | — | | | — | | | — | | | — | | | | and General Counsel | | | 2018 | | | — | | — | | — | | | — | | | — | | | — | | | |||||||||||||||||
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| Robert C. Williams(5) | | 2018 | | 279,011 | | 235,680 | | 336,314 | | — | | | — | | | 25,393 | | | 876,398 | | | Brian P. Pietrandrea | | | 2020 | | | 224,000 | | — | | 129,827 | | | 171,360 | | | 26,161 | | | 551,348 | | ||||||||||||||||||||
| Vice President and | | 2017 | | 275,400 | | — | | 465,474 | | — | | | 240,300 | | | 33,229 | | | 1,014,403 | | | Vice President and | | | 2019 | | | 210,360 | | 32,579 | | 96,349 | | | 132,821 | | | 19,526 | | | 491,635 | | ||||||||||||||||||||
| General Counsel | | 2016 | | 275,400 | | — | | 575,908 | | — | | | 235,000 | | | 32,779 | | | 1,119,087 | | | Chief Accounting Officer | | | 2018 | | | — | | — | | — | | | — | | | — | | | — | | ||||||||||||||||||||
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| | Charlene Petrelli(6) | | 2018 | | 374,539 | | 166,667 | | 1,321,731 | | 246,240 | | | — | | | 69,917 | | | 2,345,762 | | | ||||||||||||||||||||||||||||||||||||||||
| | Former Senior Vice | | 2017 | | 359,039 | | — | | 858,546 | | 213,248 | | | 425,000 | | | 136,287 | | | 1,992,120 | | | ||||||||||||||||||||||||||||||||||||||||
| | President and Chief Administrative Officer | | 2016 | | 355,000 | | — | | 1,189,305 | | 201,411 | | | 445,000 | | | 129,509 | | | 2,320,225 | | | ||||||||||||||||||||||||||||||||||||||||
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Equitrans Midstream Corporation - 2019 Proxy Statement37
| | Name | Target Total Grant Date Fair Value ($) | Maximum Total Grant Date Fair Value ($) | | | Name | Target Total Grant Date Fair Value ($) | Maximum Total Grant Date Fair Value ($) | | ||||||||||||||||||
| | Diana M. Charletta | | | 394,006 | | | 1,182,018 | | | | Thomas F. Karam | | | 1,016,401 | | | 2,032,802 | | | ||||||||
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| | Phillip D. Swisher | | | 104,704 | | | 314,112 | | | | | Kirk R. Oliver | | | 200,777 | | | 401,554 | | | | ||||||
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| | Robert C. Williams | | | 258,903 | | | 776,709 | | | | Diana M. Charletta | | | 338,800 | | | 677,600 | | | ||||||||
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| | Charlene Petrelli | | | 730,862 | | | 2,192,586 | | | | | Stephen M. Moore | | | 181,666 | | | 363,332 | | | | ||||||
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| | Brian P. Pietrandrea | | | 50,068 | | | 100,136 | | | ||||||||||||||||||
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Equitrans Midstream Corporation - 2021 Proxy Statement39
Table of Employment or a Change of Control" below.
Contents
| | Name | EQT Director Compensation ($) | Insurance Premiums ($) | 401(k) Contributions ($) | Payroll Deduction and Contribution Program ($) | Perquisites (See Below) ($) | Total ($) | | | Name | Insurance Premiums ($) | 401(k) Contributions ($) | Perquisites ($)(a) | Other ($)(b) | Total ($) | | ||||||||||||||||||||||||||||||||||||||||
| | Thomas F. Karam | | | 150,422 | | | 599 | | | 15,508 | | | 29,370 | | | 10,042 | | | 205,941 | | | Thomas F. Karam | | | 1,539 | | | 25,650 | | | 175,370 | | | 1,200 | | 203,759 | | |||||||||||||||||||
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| | Kirk R. Oliver | | | — | | | 381 | | | 9,808 | | | — | | | — | | | 10,189 | | | | Kirk R. Oliver | | | 1,142 | | | 25,650 | | | 17,980 | | | — | | 44,772 | | | |||||||||||||||||
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| | Diana M. Charletta | | | — | | | 690 | | | 24,750 | | | — | | | 10,577 | | | 36,017 | | | Diana M. Charletta | | | 1,026 | | | 25,650 | | | 17,980 | | | — | | 44,656 | | |||||||||||||||||||
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| | Phillip D. Swisher | | | — | | | 482 | | | 18,312 | | | — | | | — | | | 18,794 | | | | Stephen M. Moore | | | 857 | | | 25,650 | | | 17,980 | | | — | | 44,487 | | | |||||||||||||||||
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| | Robert C. Williams | | | — | | | 643 | | | 24,750 | | | — | | | — | | | 25,393 | | | Brian P. Pietrandrea | | | 511 | | | 25,650 | | | — | | | — | | 26,161 | | |||||||||||||||||||
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| | Charlene Petrelli | | | — | | | 855 | | | 24,750 | | | — | | | 44,312 | | | 69,917 | | | |||||||||||||||||||||||||||||||||||
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38 Equitrans Midstream Corporation - 2019 Proxy Statement
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The table below sets forth additional information regarding stock options, restricted shares and restricted share units granted by EQT to our named executive officersNEOs during the 20182020 fiscal year.
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| | | | | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares | All Other Option Awards: Number of Securities | Exercise or Base Price of | Grant Date Fair Value of Stock and | |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares | Grant Date Fair Value of Stock and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Name | Type of Award (1) | Grant Date | Approval Date | Threshold (#) | Target (#) (2) | Maximum (#) (2) | of Stock or Units (#) (3) | Underlying Options (#) (4) | Option Awards ($/share) | Option Awards ($) | | | Name | Type of Award (1) | Grant Date | Approval Date | Threshold ($) | Target ($)(2) | Maximum ($)(2) | Threshold (#) | Target (#)(3) | Maximum (#)(3) | of Stock or Units (#)(4) | Option Awards ($) | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Thomas F. Karam | | RS | | 8/9/2018 | | — | | | — | | | — | | | — | | | 59,340 | | | — | | | — | | | 3,000,230 | | | | Thomas F. Karam | | STIP | | — | | — | | | 337,500 | | | 675,000 | | | 1,350,000 | | | — | | | — | | | — | | | — | | | — | | | ||||||||||||||||||||||||||
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| | Kirk R. Oliver | | RS | | 9/10/2018 | | 9/4/2018 | | | — | | | — | | | — | | | 8,710 | | | — | | | — | | | 405,538 | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| | Diana M. Charletta | | PSU | | 1/1/2018 | | 12/5/2017 | | | — | | | 2,070 | | | 6,210 | | | — | | | — | | | — | | | 158,417 | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | 90,945 | | | 181,890 | | | 363,780 | | | — | | | 1,016,401 | | | |||||||||||||||||||||||||||
| | | RS | | 1/1/2018 | | 12/5/2017 | | | — | | | — | | | — | | | 2,070 | | | — | | | — | | | 117,824 | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 121,260 | | | 1,620,034 | | | ||||||||||||||||||||||||||||
| | | VDA | | 1/1/2018 | | 12/5/2017 | | | — | | | 4,140 | | | 12,420 | | | — | | | — | | | — | | | 235,649 | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| | Phillip D. Swisher | | PSU | | 1/1/2018 | | 12/5/2017 | | | — | | | 550 | | | 1,650 | | | — | | | — | | | — | | | 42,092 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
| | | | RS | | 1/1/2018 | | 12/5/2017 | | | — | | | — | | | — | | | 550 | | | — | | | — | | | 31,306 | | | | | Kirk R. Oliver | | STIP | | — | — | | 225,000 | | | 450,000 | | | 900,000 | | | | — | — | | — | | — | | — | | ||||||||||||||||||||||||||||||||
| | | | VDA | | 1/1/2018 | | 12/5/2017 | | | — | | | 1,100 | | | 3,300 | | | — | | | — | | | — | | | 62,612 | | | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | 17,965 | | | 35,930 | | | 71,860 | | | | — | | 200,777 | | | | ||||||||||||||||||||||||||||
| | | | SIA | | 3/7/2018 | | — | | | — | | | — | | | — | | | 650 | | | — | | | — | | | 30,882 | | | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | — | — | | — | | 23,960 | | | 320,106 | | | | ||||||||||||||||||||||||||||||||
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| | Robert C. Williams | | PSU | | 1/1/2018 | | 12/5/2017 | | | — | | | 1,360 | | | 4,080 | | | — | | | — | | | — | | | 104,081 | | | | Diana M. Charletta | | STIP | | — | | — | | | 225,000 | | | 450,000 | | | 900,000 | | | — | | | — | | | — | | | — | | | — | | | ||||||||||||||||||||||||||
| | | RS | | 1/1/2018 | | 12/5/2017 | | | — | | | — | | | — | | | 1,360 | | | — | | | — | | | 77,411 | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | 30,315 | | | 60,630 | | | 121,260 | | | — | | | 338,800 | | | ||||||||||||||||||||||||||||
| | | VDA | | 1/1/2018 | | 12/5/2017 | | | — | | | 2,720 | | | 8,160 | | | — | | | — | | | — | | | 154,822 | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 40,420 | | | 540,011 | | | ||||||||||||||||||||||||||||
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| | Charlene Petrelli | | PSU | | 1/1/2018 | | 12/5/2017 | | | — | | | 9,550 | | | 28,650 | | | — | | | — | | | — | | | 730,862 | | | | | Stephen M. Moore | | STIP | | — | — | | 150,000 | | | 300,000 | | | 600,000 | | | | — | — | | — | | — | | — | | ||||||||||||||||||||||||||||||||
| | | | RS | | 1/1/2018 | | 12/5/2017 | | | — | | | — | | | — | | | 4,780 | | | — | | | — | | | 272,078 | | | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | 16,255 | | | 32,510 | | | 65,020 | | | | — | | 181,666 | | | | ||||||||||||||||||||||||||||
| | | | SO | | 1/1/2018 | | 12/5/2017 | | | — | | | — | | | — | | | — | | | 16,000 | | | 56.92 | | | 246,240 | | | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | — | — | | — | | 21,670 | | | 289,511 | | | | ||||||||||||||||||||||||||||||||
| | | | SIA | | 3/15/2018 | | — | | | — | | | — | | | — | | | 6,710 | | | — | | | — | | | 318,792 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
| | Brian P. Pietrandrea | | STIP | | — | | — | | | 50,400 | | | 100,800 | | | 201,600 | | | — | | | — | | | — | | | — | | | — | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | 4,480 | | | 8,960 | | | 17,920 | | | — | | | 50,068 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | RS | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,970 | | | 79,759 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equitrans Midstream Corporation - 2019 Proxy Statement39
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40 Equitrans Midstream Corporation - 2021 Proxy Statement
Narrative Disclosure to Summary Compensation Table and |
Confidentiality, Non-Solicitation and Non-Competition Agreements |
TheEach of the Company's named executive officersNEOs have (and Mr. Pietrandrea had) a confidentiality, non-solicitation and non-competition agreementsagreement with the Company.Company (the non-competition agreements). In eachMarch 2020, with the assistance of Mercer, the Company undertook a review of its practices with respect to non-competition agreements in an effort to prevent the excessive use of such agreements. As a result of such review, the Company identified a number of job categories, including the Chief Accounting Officer role, for which it determined the use of non-competition agreements was not market-based. Accordingly, the Company replaced Mr. Pietrandrea's non-competition agreement with a confidentiality, non-solicitation and change of control agreement (the change of control agreement), pursuant to which the Company maintains protections regarding its confidential information and restrictions on customer and employee, vendor or independent contractor solicitation. In the non-competition agreements and Mr. Pietrandrea's change of control agreement, the named executive officerNEO agrees, among other things, to the following restrictive covenants:
In order to receive any severance benefits under his or her agreement, the named executive officerNEO must execute and deliver to the Company a general release of claims.
The agreements do not provide for any tax gross-ups. In the event the named executive officerNEO would be subject to the 20% excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (imposed on individuals who receive compensation in connection with a change of control that exceeds certain specified limits), the payments and benefits to the named executive officerNEO would be reduced to the maximum amount that does not trigger the excise tax unless the named executive officerNEO would retain greater value (on an after-tax basis) by receiving all payments and benefits and paying all excise and income taxes.
Please see "Compensation Discussion and Analysis" above for a discussion of the Company's compensation programs.
40 Equitrans Midstream Corporation - 20192021 Proxy Statement41
Outstanding Equity Awards at Fiscal Year-End |
The table below provides additional information regarding each outstanding option and equity award held by our named executive officersNEOs as of December 31, 2018, all of which were granted by EQT prior to the Separation.2020.
| Equity Awards | |||||||||||||||
Name | | Number of Shares or Units of Stock That Have Not Vested (#) (1) | | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | ||||||||
Thomas F. Karam | 59,474 | * | 1,123,456 | — | — | |||||||||||
47,501 | 950,970 | — | — | |||||||||||||
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| Kirk R. Oliver | | 8,724 | * | | 164,793 | | — | | — | | |||||
| | | 6,968 | | 139,499 | | — | | — | | ||||||
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Diana M. Charletta | — | — | 2,790 | (e)* | 52,703 | |||||||||||
— | — | 1,790 | (f)* | 33,806 | ||||||||||||
1,790 | (a)* | 33,805 | — | — | ||||||||||||
— | — | 2,077 | (g)* | 39,234 | ||||||||||||
2,077 | (b)* | 39,234 | — | — | ||||||||||||
3,571 | (d)* | 67,461 | — | — | ||||||||||||
— | — | 4,154 | (h)* | 78,469 | ||||||||||||
— | — | 2,229 | (e) | 44,625 | ||||||||||||
— | — | 1,430 | (f) | 28,629 | ||||||||||||
1,430 | (a) | 28,529 | — | — | ||||||||||||
— | — | 1,659 | (g) | 33,213 | ||||||||||||
1,659 | (b) | 33,213 | — | — | ||||||||||||
2,853 | (d) | 57,117 | — | — | ||||||||||||
— | — | 3,318 | (h) | 66,426 | ||||||||||||
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| Phillip D. Swisher | | — | | — | | 1,007 | (e)* | | 19,026 | | |||||
| | | — | | — | | 402 | (f)* | | 7,597 | | |||||
| | | 402 | (a)* | | 7,597 | | — | | — | | |||||
| | | — | | — | | 552 | (g)* | | 10,425 | | |||||
| | | 552 | (b)* | | 10,425 | | — | | — | | |||||
| | | 652 | (c)* | | 12,313 | | — | | — | | |||||
| | | 1,006 | (d)* | | 19,003 | | — | | — | | |||||
| | | — | | — | | 1,104 | (h)* | | 20,849 | | |||||
| | | — | | — | | 805 | (e) | | 16,116 | | |||||
| | | — | | — | | 322 | (f) | | 6,446 | | |||||
| | | 322 | (a) | | 6,446 | | — | | — | | |||||
| | | — | | — | | 441 | (g) | | 8,829 | | |||||
| | | 441 | (b) | | 8,829 | | — | | — | | |||||
| | | 521 | (c) | | 10,430 | | — | | — | | |||||
| | | 804 | (d) | | 16,096 | | — | | — | | |||||
| | | — | | — | | 882 | (h) | | 17,657 | | |||||
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Equitrans Midstream Corporation - 2019 Proxy Statement41
| Equity Awards | |||||||||||||||||||||||||||||||
Name | | Number of Shares or Units of Stock That Have Not Vested (#) (1) | | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | ||||||||||||||||||||||||
Robert C. Williams | — | — | 3,908 | (e)* | 73,822 | |||||||||||||||||||||||||||
— | — | 1,669 | (f)* | 31,527 | ||||||||||||||||||||||||||||
1,669 | (a)* | 31,526 | — | — | ||||||||||||||||||||||||||||
— | — | 1,365 | (g)* | 25,777 | ||||||||||||||||||||||||||||
1,365 | (b)* | 25,777 | — | — | ||||||||||||||||||||||||||||
2,983 | (d)* | 56,345 | — | — | | Equity Awards | ||||||||||||||||||||||||||
— | — | 2,729 | (h)* | 51,554 | Name | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | |||||||||||||||||||
— | — | 3,122 | (e) | 62,502 | Thomas F. Karam | — | — | 60,690 | (h) | 487,944 | ||||||||||||||||||||||
— | — | 1,334 | (f) | 26,707 | — | — | 145,512 | (i) | 1,169,917 | |||||||||||||||||||||||
1,334 | (a) | 26,707 | — | — | 60,362 | (a)* | 767,201 | — | — | |||||||||||||||||||||||
— | — | 1,090 | (g) | 21,822 | 59,219 | (a) | 476,121 | — | — | |||||||||||||||||||||||
1,090 | (b) | 21,822 | — | — | 80,919 | (d) | 650,589 | — | — | |||||||||||||||||||||||
2,383 | (d) | 47,708 | — | — | 34,559 | (e) | 277,855 | — | — | |||||||||||||||||||||||
— | — | 2,180 | (h) | 43,644 | 121,260 | (f) | 974,930 | — | — | |||||||||||||||||||||||
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| Charlene Petrelli | | — | | — | | — | | — | | Kirk R. Oliver | | — | | — | | 11,988 | (h) | | 96,384 | | |||||||||||
| | | | | | | | | | | | | | | | | | — | | — | | 28,744 | (i) | | 231,102 | | ||||||
| | | 8,852 | (a)* | | 112,509 | | — | | — | | |||||||||||||||||||||
| | | 8,679 | (a) | | 69,779 | | — | | — | | |||||||||||||||||||||
| | | 15,984 | (d) | | 128,511 | | — | | — | | |||||||||||||||||||||
| | | 6,827 | (e) | | 54,887 | | — | | — | | |||||||||||||||||||||
| | | 23,960 | (f) | | 192,638 | | — | | — | | |||||||||||||||||||||
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Diana M. Charletta | 2,108 | (b)* | 26,793 | — | — | |||||||||||||||||||||||||||
2,108 | (g)* | 26,793 | — | — | ||||||||||||||||||||||||||||
— | — | 17,982 | (h) | 144,575 | ||||||||||||||||||||||||||||
— | — | 48,504 | (i) | 389,972 | ||||||||||||||||||||||||||||
2,066 | (b) | 16,611 | — | — | ||||||||||||||||||||||||||||
23,976 | (d) | 192,767 | — | — | ||||||||||||||||||||||||||||
11,520 | (e) | 92,618 | — | — | ||||||||||||||||||||||||||||
40,420 | (f) | 324,977 | — | — | ||||||||||||||||||||||||||||
2,066 | (g) | 16,611 | — | — | ||||||||||||||||||||||||||||
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| Stephen M. Moore | | — | | — | | 10,212 | (h) | | 82,104 | | |||||||||||||||||||||
| | | — | | — | | 26,008 | (i) | | 209,104 | | |||||||||||||||||||||
| | | 13,616 | (d) | | 109,473 | | — | | — | | |||||||||||||||||||||
| | | 6,177 | (e) | | 49,662 | | — | | — | | |||||||||||||||||||||
| | | 21,670 | (f) | | 174,227 | | — | | — | | |||||||||||||||||||||
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Brian P. Pietrandrea | 417 | (b)* | 5,300 | — | — | |||||||||||||||||||||||||||
671 | (c)* | 8,528 | — | — | ||||||||||||||||||||||||||||
418 | (g)* | 5,313 | — | — | ||||||||||||||||||||||||||||
— | — | 1,798 | (h) | 14,456 | ||||||||||||||||||||||||||||
— | — | 7,168 | (i) | 57,631 | ||||||||||||||||||||||||||||
410 | (b) | 3,296 | — | — | ||||||||||||||||||||||||||||
659 | (c) | 5,298 | — | — | ||||||||||||||||||||||||||||
2,398 | (d) | 19,278 | — | — | ||||||||||||||||||||||||||||
1,702 | (e) | 13,687 | — | — | ||||||||||||||||||||||||||||
5,970 | (f) | 47,999 | — | — | ||||||||||||||||||||||||||||
410 | (g) | 3,296 | — | — | ||||||||||||||||||||||||||||
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42 Equitrans Midstream Corporation - 2021 Proxy Statement
42 Equitrans Midstream Corporation - 2019 Proxy Statement
Tableapplicable, on the vesting dates and subject to the terms of Contentsthe applicable awards.
(3)
Equitrans Midstream Corporation - 2021 Proxy Statement43
Option Exercises and Stock Vested |
The table below sets forth the number of shares and cash acquired in the 20182020 fiscal year as a result of the vesting of restricted stock units, restricted shares or performance awards or the exercise of options previously awarded by EQT to our named executive officers.awards.
| Option Awards | Stock Awards | |||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) (2) | Value Realized on Vesting ($) (3) | |||||||||||
Thomas F. Karam | | | — | | | — | | — | | — | | ||||
Kirk R. Oliver | | | — | | | — | | — | | — | | ||||
Diana M. Charletta | | | — | | | — | | 11,666 | * | 634,072 | | ||||
Phillip D. Swisher | | | — | | | — | | 3,392 | * | 184,296 | | ||||
Robert C. Williams | | | — | | | — | | 13,538 | * | 728,702 | | ||||
Charlene Petrelli | | | — | | | — | | 19,044 | * | 967,827 | |
| | | | Stock Awards | ||||||||||
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| | Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | |||||||||
| | Thomas F. Karam | | | — | | | | — | | | |||
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| | Kirk R. Oliver | | | — | | | | — | | | | ||
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| | Diana M. Charletta | | | 10,254 | * | | | 111,769 | | | |||
| | | | 9,607 | | | | 128,344 | | | ||||
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| | Stephen M. Moore | | | — | | | | — | | | | ||
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| | Brian P. Pietrandrea | | | 1,701 | * | | | 17,274 | | | |||
| | | | 1,588 | | | | 18,788 | | | ||||
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Equitrans Midstream Corporation - 2019 Proxy Statement43
Potential Payments Upon Termination or Change of Control |
The tables below set forth the amount of compensation that may be paid to each named executive officerNEO in the event of certain terminations of employment or a change of control of the Company. The amounts shown assume a termination date or change of control date, as applicable, of December 31, 2018.2020.
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The confidentiality, non-solicitation and non-competition agreementsOur NEOs may receive various forms of compensation or benefits in connection with the Company provide for severance payments to the named executive officers in the event of a termination of employment byemployment. These benefits result primarily from the non-compete agreements and change of control agreement, as applicable, and the terms of equity-based grants received from the Company without "cause" or by the named executive officer for "good reason" (eachpreviously from EQT as described further below. For purposes of this discussion, certain defined below), regardless of whether that termination occurs before or after a change of control. In such an event, the named executive officer will be entitled to receive the following cash payments:
44 Equitrans Midstream Corporation - 20192021 Proxy Statement
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Cause | | The NEO's: ➢ conviction of a felony, a crime of moral turpitude or fraud or the NEO having committed fraud, misappropriation or embezzlement in connection with the performance of the NEO's duties; ➢ willful and repeated failures to substantially perform assigned duties; or ➢ violation of any provision of a written employment-related agreement or express significant policies of the Company. | | |||
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Good Reason | | The NEO's resignation within 90 days after: ➢ a reduction in the NEO's base salary of 10% or more (unless the reduction is applicable to all similarly situated employees); ➢ a reduction in the NEO's annual short-term bonus target of 10% or more (unless the reduction is applicable to all similarly situated employees); ➢ a significant diminution in the NEO's job responsibilities, duties or authority; ➢ a change in the geographic location of the NEO's primary reporting location of more than 50 miles; and/or ➢ any other action or inaction that constitutes a material breach by the Company of the agreement. | | |||
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Retirement | | The NEO's voluntary termination of employment with the Company after he or she has: ➢ a length of service of at least ten (10) years; and ➢ a combined age and length of service equal to at least sixty (60) years. | | |||
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Change of Control | | Generally means any of the following events: ➢ the sale of all or substantially all of the Company's assets, unless the Company's shareholders prior to the sale own at least 80% of the acquirer's stock after the sale; ➢ the acquisition by a person or group of beneficial ownership of 30% or more of the Company's outstanding common stock, subject to enumerated exceptions; ➢ the termination of the Company's business and the liquidation of the Company; ➢ the consummation of a merger, consolidation, reorganization, share exchange or similar transaction of the Company, unless the Company's shareholders immediately prior to the transaction continue to hold more than 50% of the voting securities of the resulting entity, no person beneficially owns 30% or more of the resulting entity's voting securities and individuals serving on the Company's Board immediately prior to the transaction constitute at least a majority of the resulting entity's board; and ➢ a change in the composition of the Board, so that existing Board members and their approved successors do not constitute a majority of the Board. | | |||
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Structural Termination | | ➢ Termination of the NEO by the Company as a result of (i) the sale, consolidation or full or partial shutdown of a facility, department or business unit or (ii) a position elimination because of a reorganization or lack of work. | | |||
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Confidentiality, Non-Solicitation and Non-Competition Agreements |
Each of our NEOs had entered into a non-competition agreement with the Company. In March 2020, Mr. Pietrandrea's non-competition agreement was terminated and replaced with a change of control agreement. The non-competition agreements contain restrictive covenants that prohibit each applicable NEO from competing with or soliciting customers of the Company for 24 months or soliciting employees of the Company for 36 months following termination. Mr. Pietrandrea's change of control agreement prohibits Mr. Pietrandrea from soliciting customers or employees of the Company for a period of 12 months following termination. The agreements provide for cash payments if the Company terminates employment of the NEO without cause or if the NEO terminates employment for good reason, regardless of whether the termination occurs before or after a change of control (with respect to Mr. Pietrandrea, such termination must occur after a change of control, and
Equitrans Midstream Corporation - 2021 Proxy Statement45
the EQM Merger was expressly carved out of the definition of change of control for purposes of his change of control agreement). If such termination occurs, the NEO is entitled to a lump sum cash payment as follows:
Cash Payments* | | |||||||
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| Severance | | Health Insurance | | ||||
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24 months base salary (12 months base salary for Mr. Pietrandrea) | 18 X monthly COBRA rate for | |||||||
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| For each NEO (other than Mr. Pietrandrea), two times target annual incentive under the Company's short-term incentive plan | family coverage (12 X for | ||||||
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A lump sum of $15,000 for Mr. Pietrandrea | Mr. Pietrandrea) | |||||||
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Annual Incentives |
The EQT STIP for the 2018 plan year containedprovides guidelines to determine awards when a participant's status changed during the year which generally included the following terms:as follows:
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Resignation | | ➢ No payment if employee resigns for any reason before awards are paid. | | |||
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Death/Disability/ Retirement* | | ➢ Considered for pro-rata payment if employee otherwise qualifies for payment of an incentive award. | | |||
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Change of Control* | | ➢ The performance period will end on the date of the change of control+, and the performance metrics will be deemed to be achieved for the pro-rata portion of the performance period that elapsed through the date of the change of control, at actual levels. | | |||
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Treatment of Outstanding Equity Awards |
All outstanding equity awards wouldwill be paid toin accordance with the participants, subject to terms of the planplans and are subject to the Compensation Committee's discretion to payreduce or eliminate the award. As a lesser amount.
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Under Mr. Williams confidentiality, non-competition and non-disclosure agreement, in the event of a termination of employment byEQM Merger, the Company without "cause" or by Mr. Williams for "good reason" (each as defined below), regardless of whether that termination occurs before or afterexperienced a change of control Mr. Williams's time-based EQT andunder the ETRN LTIP awards shall become immediately vested and exercisable in full and any restrictions on such awards shall lapse. In addition, Mr. Williams's VDA awards shall be earned based on (i) target level of performance if the termination occurs prior to Compensation Committee approvalfor purposes of the performance or (ii) at actual level of performance ifEQT 2018 Restricted Shares and Restricted Share Units, the termination occurs afterEQT 2018 IPSUP, the Compensation Committee approval while all other performance-based equity shall remain outstanding2019 Equitrans Midstream Restricted Shares and be earned, if at all, based on actual performance throughRestricted Share Units and the end2019 PSUP. The EQM Merger was expressly carved out of the performance period.
Underdefinition of change of control under the Strategic Implementation Award, if a participant's employment is terminated by the Company for any reason other than cause, all unvested restricted units2020 PSUP and confirmed performance units will vest in full.
In addition, if the event of a termination by the Company as a result of (i) the sale, consolidation or full or partial shutdown of a facility, department or business unit or (ii) a position elimination because of a reorganization or lack of work, each such termination a "Structural Termination," each named executive officer shall be treated in the same manner as if he or she had incurred a termination resulting from the executive's disability (as described in greater detail below).
If following a voluntary termination (other than for good reason) the participant remains on (i) the Company's Board of Directors or the EQM Board for the EQT 2015 IPSUP or the 2015 Options; or (ii) the Company's Board of Directors, the EQM Board or the EQGP Board for the EQT 2016 IPSUP, the EQT 2017 IPSUP, the 2016 VDA Program, the 2017 VDA Program, the 20172020 Restricted Share and Unit Awards,Awards. However, each NEO signed a letter agreement during the 2016 Options,first quarter of 2020 pursuant to which each NEO agreed to waive the change of control resulting from the EQM Merger for purposes of his or her outstanding ETRN LTIP awards. Additionally, the 2017 Options, thenEQM Merger was expressly carved out of the participant's awarded share units continue to vest for so long asdefinition of Change of Control under the participant remains on such board.2020 PSUP and the 2020 Restricted Share and Unit Awards.
46 Equitrans Midstream Corporation - 20192021 Proxy Statement45
Termination Resulting from Death or Disability |
If a participant'sthe NEO's employment is terminated as a result of disability or death with respecton or after January 1, 2020 but prior to the 2017 restricted shares and restricted units, allapplicable vesting date, unvested restricted shares and restricted unitsequity awards would vest as follows:
Restricted Shares and Restricted Share Units | | |||||
| | |||||
| | | | | | |
| Termination on or after the second anniversary of grant date and prior to the third anniversary of grant date | 50% | | |||
| | | | | | |
If termination is due to death, the 2018 Restricted Share Units vest in full | ||||||
| | | | | | |
If the named executive officer's termination is due to his or her death, the 2018 restricted shares and restricted share units shall vest in full.
| ||||||
| ||||||||
46 Equitrans Midstream Corporation - 2019 Proxy Statement
If the named executive officer's termination is due to his or her death, the 2018 Incentive PSU Program share units shallRestricted Shares vest in full at target performance.
| | | | | | |
Performance Share Units | | |||||||
In the event of death or disability before payment the NEO may receive payment for a percentage of awarded units, contingent upon achievement of the applicable performance conditions, as follows: | ||||||||
| | | | | | |
| EQT 2018 Incentive PSU Program | | ||||
Disability January 1, | 50% | |||||
| | | | | | |
| ||||||
100% | ||||||
| | | | | | |
| | | | | | |
| | |||||||
If termination is due to death or disability, the 2019 and | ||||||||
| | | | | | |
Termination Due to Named Executive Officer's Retirement |
2019 and 2020 Restricted Share Awards | | |||||
In the event the NEO's termination is due to qualifying retirement, a pro-rata portion* of the 2019 and 2020 Restricted Share Awards will vest, subject to the NEO's continued employment with the Company through such retirement date. | ||||||
| | | | | | |
2019 and 2020 PSUP Awards | | |||||
In the event the NEO's termination is due to qualifying retirement, the NEO will retain a pro-rata portion* of the 2019 and 2020 PSUP awards, subject to achievement of the performance conditions and the NEO's continued employment with the Company through such retirement date. | ||||||
| | | | | | |
*The pro-rata portion of the awards shall be equal to the number of restricted shares or performance units, as applicable, granted (or with respect to the 2020 PSUP, awards earned for each applicable performance period) multiplied by a fraction, the numerator of which is the number of months of continuous employment with the Company from the beginning of the vesting period for restricted shares or the beginning of the performance period for the performance restricted share units, as applicable, through the NEO's date of retirement, and the denominator of which is 36. |
IfIn the named executive officer'sevent the NEO's termination is due to his or her death, the 2018 VDA Program share units shall vest in full at target performance.retirement, no payments will be made under any outstanding EQT awards.
Equitrans Midstream Corporation - 2021 Proxy Statement47
Change of Control |
In the event of a change of control of the Company, the treatment of awards outstanding under the EQT LTIP and ETRN LTIPequity awards depends on whether the awards are assumed by an acquirer in a change of control or equitably converted in the transaction.
If the awards are assumed by the acquirer or equitably converted in the transactionand the participant incurs a Structural Termination (or the participantexecutive dies, or becomes disabled, is terminated without cause or resigns for good reason under the ETRN LTIP)LTIP, within two years after the qualifying change of control, then upon such termination or resignation:
As a result of the EQM Merger, the Company experienced a change of control under the ETRN LTIP for purposes of the EQT 2018 Restricted Shares and Restricted Share Units, the EQT 2018 IPSUP, the 2019 Equitrans Midstream Corporation -Restricted Shares and Restricted Share Units and the 2019 Proxy Statement47
TablePSUP. However, each NEO signed a letter agreement during the first quarter of Contents2020 pursuant to which each NEO agreed to waive the change of control resulting from the EQM Merger for purposes of his or her outstanding ETRN LTIP awards. Additionally, the EQM Merger was expressly carved out of the definition of Change of Control under the 2020 PSUP and the 2020 Restricted Share and Unit Awards.
However, if theIf awards are not assumed by the acquirer or equitably converted in the transaction:
|
The Company maintainsNEOs' outstanding equity awards provide that if following a severance pay planvoluntary termination (other than for eligible employees whose employment is terminated bygood reason) the executive remains on the board of directors of the Company, then awarded share units continue to vest for reasons other than misconduct or performance. Messrs. Williams and Swisher and, under her employment agreementso long as in effect in 2018, Ms. Charletta, are eligible for benefitsthe NEO remains on such board.
Additionally, under the severance pay plan. Messrs. Karam and Oliver and, underoutstanding EQT awards that converted into Company awards in connection with the termsSeparation, in the event of her new employment agreement effectivea Structural Termination, the NEO will be treated in 2019, Ms. Charletta, are not entitled to severance benefits under this plan. The cash benefit available under the plan depends upon, among other things, the reason for the separation, the term of employment of the individual and whether the individual deliverssame manner as a release of claims. The maximum benefit available under the severance pay plan consists of:disability (described above).
Life Insurance |
The Company provides a life insurance benefit equal to one times base salary for all employees. Each named executive officerNEO receives an additional one times base salary life insurance benefit.
|
"Cause" is defined as the named executive officer's (i) conviction of a felony, a crime of moral turpitude or fraud or the named executive officer having committed fraud, misappropriation or embezzlement in connection with the performance of his duties; (ii) willful and repeated failures to substantially perform assigned duties; or (iii) violation of any provision of a written employment-related agreement or express significant policies of the Company.
"Good reason" is defined as the named executive officer's resignation within 90 days after: (i) a reduction in the named executive officer's base salary of 10% or more (unless the reduction is applicable to all similarly situated employees); (ii) a reduction in the named executive officer's annual short-term bonus target of 10% or more (unless the reduction is applicable to all similarly situated employees); (iii) a significant diminution in the named executive officer's job responsibilities, duties or authority; (iv) a change in the geographic location of the named executive officer's primary reporting location of more than 50 miles; and/or (v) any other action or inaction that constitutes a material breach by the Company of the agreement.
"Change of control" generally means any of the following events:
48 Equitrans Midstream Corporation - 2019 Proxy Statement
|
Prior to the Separation, pursuant to her agreement that was approved by EQT and assigned to the Company in connection with the Separation, Ms. Petrelli elected to participate in an executive alternative work arrangement pursuant to which she would provide no less than 100 hours of service to the Company for one year following the relinquishment of full-time status. Under the arrangement, she has also agreed to be available for up to 300 additional hours of service per year upon request of the Company. In no event will she work more than 400 hours per year. The arrangement will automatically renew for four successive annual terms unless terminated by either party.
Notwithstanding an election to participate in the arrangement, participation was contingent on (i) Ms. Petrelli being an executive officer in good standing with the Company at the time of the move to part-time status; (ii) her employment being terminated by the Company without cause, or providing the Company with at least 90 days advance written notice of her intention to discontinue employment; and (iii) Ms. Petrelli not terminating her employment for good reason.
In consideration for her agreement to provide services to the Company under the arrangement, Ms. Petrelli is paid at an established hourly rate. She will receive the following benefits which, unless otherwise noted, will extend for the term of the arrangement or, if the arrangement is terminated by the Company without cause, for five years:
Under the terms of the arrangement, the covenants as to confidentiality, non-competition and non-solicitation contained in Ms. Petrelli's confidentiality, non-solicitation and non-competition agreement that was assigned to the Company in connection with the Separation remain in effect throughout the alternative work arrangement and for a period thereafter of not less than the time frames established in her confidentiality, non-solicitation and non-competition agreement.
Equitrans Midstream Corporation - 2019 Proxy Statement49
Payments Triggered Upon Hypothetical Termination of Employment or Change of Control on December 31, 2018
The tables below reflect the amount ofestimated compensation payable to each named executive officerNEO upon a hypothetical termination of employment or change of control on December 31, 2018. In addition, with respect to Mr. Williams, we have also included a narrative that reflects the amount of compensation received by him in connection with the termination of his employment effective March 28, 2019. With respect to Ms. Petrelli, the narrative set forth below reflects the amount of compensation received by her in connection with the termination of her employment effective December 13, 2018.2020. In calculating potential payments, for purposes of this disclosure, we have quantified our equity-based payments using the Company's and EQT's closing stock priceprices on December 31, 2018,2020, which were $20.02$8.04 and $18.89,$12.71, respectively. For purposes of the analysis, the Company has assumed that (i) no named executive officerNEO will remain on the Company's Board of Directors or the EQM Board following termination of employment and (ii) in the event of a change of control, the acquirer does not assume or equitably convert the outstanding long-term incentive awards issued under the Company'sETRN LTIP (a Qualifying Change of Control) and therefore such awards accelerate and payoutpay out upon the change of control. In addition, the Company has not factored in any reduction that may apply as a result of the potential reduction to avoid an excise tax imposed on individuals who received compensation in connection with a change of control that exceeds certain specified limits.
For performance share units, the Company assumed performance at the end of the applicable performance period remains unchanged from performance as of
48 Equitrans Midstream Corporation - 2021 Proxy Statement
December 31, 2018.2020. In an actual termination scenario, the Company's actual payment obligation would be determined based on actual performance through the end of the performance period and payment would be made to the then-former executive at the same time it is made to all Company employees holding such awards, if at all.
For additional information regardingThere would be no compensation paid to an NEO if the amounts included inexecutive is terminated by the row labeled "Cash Severance Payments" see "Cash Payment" on page 44 above.
Thomas F. Karam: Upon a termination of employment on December 31, 2018, Mr. Karam would have been entitled toCompany for cause or the following payments upon each type of termination:executive resigns without good reason.
Thomas F. Karam | Thomas F. Karam | | ||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Termination by Company for Cause ($) | | Termination by Executive for Good Reason ($) | | Termination by Executive Without Good Reason ($) | | Death ($) | | Disability ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||||||||||
Cash Severance Payments | 6,779,346 | 0 | 6,779,346 | 0 | 0 | 0 | Cash Severance Payments | 2,732,058 | 2,732,058 | 1,147,500 | 1,147,500 | — | 2,732,058 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Severance Plan | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | LTIP | | 767,202 | * | | 767,202 | * | | 6,035,134 | | 5,413,471 | | — | | 4,786,144 | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | 0 | 0 | 0 | 0 | 1,350,000 | 0 | Life Insurance | — | — | 1,350,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 6,779,346 | | 0 | | 6,779,346 | | 0 | | 1,350,000 | | 0 | | Total | | 3,499,260 | | 3,499,260 | | 8,532,634 | | 6,560,971 | | 0 | | 7,518,202 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Mr. Karam would be entitled to cash and stock payments with an aggregate value of $2,074,426$1,005,264 upon his deatha Structural Termination.
Kirk R. Oliver | | |||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||
Cash Severance Payment | 1,932,058 | 1,932,058 | 765,000 | 765,000 | — | 1,932,058 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| LTIP | | 112,513 | * | | 112,513 | * | | 1,128,898 | | 1,037,752 | | — | | 882,185 | | ||||||
| | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 1,000,000 | — | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Total | | 2,044,571 | | 2,044,571 | | 2,893,898 | | 1,802,752 | | 0 | | 2,814,243 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Mr. Oliver would be entitled to cash payments with an aggregate value of $147,403 upon a Structural Termination.
Diana M. Charletta | | | | | | | ||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | ||||||||||
Cash Severance Payment | 1,832,058 | 1,832,058 | 765,000 | 765,000 | 765,000 | 1,832,058 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| LTIP | | 68,760 | * | | 68,760 | * | | 1,611,635 | * | | 1,565,902 | * | | 465,604 | | 1,241,566 | | ||||
| | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 900,000 | — | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Total | | 1,900,818 | | 1,900,818 | | 3,276,635 | | 2,330,902 | | 1,230,604 | | 3,073,624 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Ms. Charletta would be entitled to cash payments with an aggregate value of $80,113 upon a Structural Termination assuming actual performance through the end of the applicable performance period is consistent with performance through December 31, 2018. Under those same programs, Mr. Karam would be entitled to $2,074,426 upon the occurrence of a change of control of ETRN on December 31, 2018.2020.
50 Equitrans Midstream Corporation - 20192021 Proxy Statement49
Stephen M. Moore | | | | | | | ||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||
Cash Severance Payment | 1,382,058 | 1,382,058 | 510,000 | 510,000 | — | 1,382,058 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| LTIP | | — | | — | | 834,641 | | 834,641 | | — | | 624,478 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 750,000 | — | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Total | | 1,382,058 | | 1,382,058 | | 2,094,641 | | 1,344,641 | | 0 | | 2,006,536 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Kirk R. Oliver: Upon a termination of employment on December 31, 2018, Mr. Oliver would have been entitled to the following payments upon each type of termination:
Brian P. Pietrandrea | Brian P. Pietrandrea | | ||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Termination by Company for Cause ($) | | Termination by Executive for Good Reason ($) | | Termination by Executive Without Good Reason ($) | | Death ($) | | Disability ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||||||||||
Cash Severance Payments | 2,729,346 | 0 | 2,729,346 | 0 | 0 | 0 | Cash Severance Payment | 122,686 | 0 | 171,360 | 171,360 | 171,360 | 260,372 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Severance Plan | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | LTIP | | 22,150 | * | | 22,150 | * | | 227,103 | * | | 211,128 | * | | 60,942 | | 190,100 | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | 0 | 0 | 0 | 0 | 1,000,000 | 0 | Life Insurance | — | — | 448,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 2,729,346 | | 0 | | 2,729,346 | | 0 | | 1,000,000 | | 0 | | Total | | 144,836 | | 22,150 | | 846,463 | | 382,488 | | 232,302 | | 450,472 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Mr. OliverPietrandrea would be entitled to cash and stock payments with an aggregate value of $307,644$27,050 upon his deatha Structural Termination assuming actual performance through the end of the applicable performance period is consistent with performance through December 31, 2018. Under those same programs,2020.
Pay Ratio Disclosure |
The following is an estimate of the relationship of the annual total compensation of Mr. Oliver would be entitled to $307,644 uponKaram, the occurrence of a change of control of ETRNCEO, on December 31, 2018.
Diana M. Charletta: Upon2020, and the median of the annual total compensation of all employees (other than the CEO), calculated in accordance with SEC rules. In making this pay ratio disclosure, other companies may use assumptions, estimates and methodologies different than the Company; as a termination of employment on December 31, 2018, Ms. Charletta would have been entitledresult, the following information may not be comparable to the following payments upon each typeinformation provided by other companies.
For 2020:
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Termination by Company for Cause ($) | | Termination by Executive for Good Reason ($) | | Termination by Executive Without Good Reason ($) | | Death ($) | | Disability ($) | | |||||||||
Cash Severance Payments | 1,955,604 | 0 | 1,955,604 | 0 | 0 | 0 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Severance Plan | | 223,782 | | 0 | | 0 | | 0 | | 0 | | 0 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | 0 | 0 | 0 | 0 | 800,000 | 0 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Total | | 2,179,386 | | 0 | | 1,955,604 | | 0 | | 800,000 | | 0 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding long-term incentive programs, Ms. Charletta would be entitled to cashMr. Karam was $4,662,694; and stock payments with an aggregate value of $198,085 upon a Structural Termination and upon her disability; and $730,196 upon her death assuming, in each case, actual performance through
Based on this information, the ratio of the total compensation of Mr. Karam to the median of the annual total compensation of all other employees was 36 to 1.
The compensation identified above for both Mr. Karam and the median employee was calculated using the same methodology used for the NEOs as set forth in the 2020 Summary Compensation Table. See "Compensation Discussion and Analysis" above for a discussion of Mr. Karam's compensation.
In accordance with SEC rules, the Company has chosen to use the same median employee that was selected in 2019, as there has been no change in the Company's employee population or employee compensation arrangements that the Company believes would significantly impact the pay ratio disclosure. In 2019, the Company identified the median employee by selecting total cash compensation as the compensation measure. Total cash compensation is consistentannual base salary plus target annual bonus or, in the case of hourly employees, annualized regular earnings including actual overtime earned plus target annual bonus. The Company did not make any other assumptions, adjustments, or estimates with performance through December 31, 2018. Under those same programs, Ms. Charletta would be entitledrespect to $1,019,822 upontotal cash compensation. The Company believes total cash compensation is an appropriate compensation measure because the occurrence of a change of control of ETRN on December 31, 2018.Company does not
Equitrans Midstream Corporation - 2019 Proxy Statement51
Phillip D. Swisher: Upon a termination of employment on December 31, 2018, Mr. Swisher would have been entitled to the following payments upon each type of termination:
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Termination by Company for Cause ($) | | Termination by Executive for Good Reason ($) | | Termination by Executive Without Good Reason ($) | | Death ($) | | Disability ($) | | |||||||||
Cash Severance Payments | 549,764 | 0 | 549,764 | 0 | 0 | 0 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Severance Plan | | 135,782 | | 0 | | 0 | | 0 | | 0 | | 0 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | 0 | 0 | 0 | 0 | 448,000 | 0 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Total | | 685,546 | | 0 | | 549,764 | | 0 | | 448,000 | | 0 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding long-term incentive programs, Mr. Swisher would be entitled to cash and stock payments with an aggregate value of $23,026 upon a termination of employment by the Company without cause; $68,536 upon a Structural Termination; $45,510 upon his disability; and $211,096 upon his death assuming, in each case, actual performance through the end of the applicable performance period is consistent with performance through December 31, 2018. Under those same programs, Mr. Swisher would be entitled to $277,195 upon the occurrence of a change of control of ETRN on December 31, 2018.
Robert C. Williams: Mr. Williams's employment with the Company under his confidentiality, non-solicitation and non-competition agreement terminated effective March 28, 2019. In connection with such termination, Mr. Williams was entitled to receive a lump sum payment of $704,211 in accordance with his confidentiality, non-solicitation and non-competition agreement and separation agreement. Also in connection with such termination, Mr. Williams vested in his outstanding long-term incentive awards and became entitled to receive the benefit of such awards to the extent and at the same time as other participants. Such awards have an aggregate value of $724,763 assuming actual performance through the end of the applicable performance periods is consistent with performance through December 31, 2018.
Upon a termination of employment on December 31, 2018, Mr. Williams would have been entitled to the following payments upon each type of termination:
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Termination by Company for Cause ($) | | Termination by Executive for Good Reason ($) | | Termination by Executive Without Good Reason ($) | | Death ($) | | Disability ($) | | |||||||||
Cash Severance Payments | 1,151,767 | 0 | 1,151,767 | 0 | 0 | 0 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Severance Plan | | 149,436 | | 0 | | 0 | | 0 | | 0 | | 0 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | 0 | 0 | 0 | 0 | 594,000 | 0 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Total | | 1,301,203 | | 0 | | 1,151,767 | | 0 | | 594,000 | | 0 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding long-term incentive programs, Mr. Williams would be entitled to cash and stock payments with an aggregate value of $724,763 upon a termination of employment by the Company without cause and upon termination by him for good reason; $163,264 upon a Structural Termination and upon his disability; and $471,295 upon his death assuming, in each case, actual performance through the end of the applicable performance period is consistent with performance through December 31, 2018. Under those same programs, Mr. Williams would be entitled to $724,763 upon the occurrence of a change of control of ETRN on December 31, 2018.
5250 Equitrans Midstream Corporation - 20192021 Proxy Statement
Charlene Petrelli: Ms. Petrelli's employment withwidely distribute annual equity awards to employees. The Company then selected the Company under her confidentiality, non-solicitationmedian employee, having identified the 2019 total cash compensation for all of its employees (excluding the CEO) on the measurement date, December 31, 2019, the last day of the payroll year.
Employee, Officer and Director Hedging |
Under the Company's Corporate Stock Trading Policy, no officer, director or employee may engage in any short sale or hedging transaction involving, or purchase or sell options in, Equitrans Midstream securities. For purposes of the policy, prohibited hedging transactions are transactions designed to hedge or offset any change in the market value of Equitrans Midstream securities held, directly or indirectly, by the officer, director or employee (including incentive and non-competition agreement terminated effective December 13, 2018. In connection with such termination, Ms. Petrelli was entitled to receive a lump sum payment of $3,249,472 in accordance with her confidentiality, non-solicitationother compensation awards) and non-competition agreement which was assignedinclude, but are not limited to, the Company in connection withuse of financial instruments such as prepaid variable forwards, equity swaps, puts, calls, forwards, collars, exchange funds and other derivative instruments. Additionally, under the Separation and her transition agreement. Also in connection with such termination, Ms. Petrelli vested in her outstanding long-term incentive awards and became entitledpolicy, no executive officer or director of Equitrans Midstream may pledge (or otherwise allow a lien to receive the benefit of such awards to the extent and at the same time as other participants. Such awards have an aggregate value of $2,172,577 assuming actual performancebe imposed upon) Equitrans Midstream securities including through the enduse of a margin account with a broker. The holding of securities in a brokerage account that permits margining is not a violation of the applicable performance periods is consistent with performance through December 31, 2018. In addition, under those programs (and includingpolicy so long as the intrinsic valueowner of outstanding options), Ms. Petrelli would have been entitled tothe account does not engage in any transaction that results in a value of $2,172,577lien upon the occurrence of a change of control on December 31, 2018. As of December 31, 2018,Equitrans Midstream securities held in the benefits described above had not yet been paid and were contingent on the following additional performance by Ms. Petrelli: (i) her execution of a general release of claims, which was signed in January 2019, and (ii) her compliance with applicable restrictive covenants.
Upon her termination, Ms. Petrelli's Executive Alternative Work Arrangement became effective. See "Executive Alternative Work Arrangement" above for more detail regarding the terms of this arrangement.account.
Equitrans Midstream Corporation - 20192021 Proxy Statement 5351
ITEM NO. 2 – ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS FOR |
The Board of Directors recommends a voteFORapproval of the compensation of the Company's named executive officers for |
We are seeking an advisory vote to approve the compensation of our named executive officers for 2018, most of which was determined by EQT prior to the Separation.2020.
This proposal, commonly known as a say-on-pay proposal, gives the Company's shareholders the opportunity to express their views on the compensation of its named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company's named executive officers and the philosophy, policies and practices described in this proxy statement.
After our shareholders voted in 2019, the Board determined that the Company will hold an advisory vote on executive compensation every year until the next shareholder advisory vote on the frequency of say-on-pay proposals, which we expect will be conducted at our 2025 annual meeting of shareholders.
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board of Directors. However, the Board and the Compensation Committee value the opinions of the Company's shareholders and will consider the outcome of the vote when making future decisions regarding the compensation of our named executive officers.
As discussed in the "Compensation Discussion and Analysis" above, our Board believes that the Company's compensation program, practicespolicies and policiespractices drive performance, and align our executives' interests with those of our shareholders.
Our Board invites you to review the "Compensation Discussion and Analysis" and the tabular and other disclosures on compensation included under the "Executive Compensation" section of this proxy statement.
Our Board recommends that you voteFOR the following advisory resolution:
"Resolved, that the shareholders approve the compensation of the Company's named executive officers for 2018,2020, as discussed and disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables and any related material disclosed in this proxy statement."
5452 Equitrans Midstream Corporation - 20192021 Proxy Statement
ITEM NO. 3 – |
The Board of Directors recommends a vote |
As describedThe Company's Amended and Restated Articles of Incorporation (Articles) currently require the affirmative vote of at least 80% of the Company's outstanding shares of capital stock entitled to vote in Item No. 2, we are asking ouran annual election of directors (the Voting Stock) for shareholders to approve the following actions:
The Bylaws currently require the affirmative vote of at least 80% of the Voting Stock for shareholders to approve an advisoryamendment to the Bylaws, unless such action has been previously approved by a two-thirds vote on executive compensation, otherwise known as say-on-pay. This Item No. 3 solicits input fromof the whole Board.
The Board has unanimously approved, and is recommending that our shareholders on how frequently we should hold suchapprove, amendments to the Articles and Bylaws to eliminate the current 80% supermajority voting requirements for shareholders to approve amendments to the Articles and Bylaws and to remove directors outside of the annual meeting process. Because the Board has unanimously approved the proposed amendments, under the provisions of our current Articles, the vote required in order for shareholders to approve the proposed amendments is the vote specified by applicable law for valid shareholder action, rather than the current 80% supermajority voting requirement noted above. The Pennsylvania Business Corporation Law (the Pennsylvania BCL) provides generally that (except as otherwise provided under a vote in the future. You may vote for a say-on-pay votecompany's articles of incorporation or bylaws) whenever any corporate action is to be held every one, two or three years, or you may abstaintaken by vote of the shareholders of a business corporation, it will be authorized upon receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon. If approved, the proposed amendments would reduce the voting threshold for shareholders to approve amendments to the Articles and Bylaws and to remove directors outside of the annual meeting process from voting.the current threshold of the affirmative vote of at least 80% of the Voting Stock to the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon, consistent with the standard generally applicable under the Pennsylvania BCL.
Our Board concluded that we should seek shareholder input through an annual advisory vote. In formulating its recommendation,The supermajority voting requirements reflected in our Articles and Bylaws were adopted by EQT in connection with the Separation. Since the Separation, the Corporate Governance Committee of the Board concluded that regular input onand the Board, together with the Company's compensation philosophy, policies and practices ismanagement, have engaged in an important partongoing review of a comprehensivethe Company's corporate governance program. An annualprinciples, including a review of the legacy supermajority vote will provide meaningful and timely communication from our shareholdersrequirements. The Board believes in maintaining best practices related to the CompensationCompany's corporate governance, and it recognizes that supermajority voting requirements are often criticized as impeding director accountability and responsiveness to shareholders and limiting shareholder rights. The Corporate Governance Committee and the Board which reviews elementscarefully considered the advantages and disadvantages of our compensation program periodicallymaintaining the 80% supermajority voting requirements in the Articles and adjusts executive compensation as appropriate, each year.
The frequencyBylaws. After carefully reviewing these considerations, the Corporate Governance Committee determined, and the Board agreed, that it is in the best interest of the say-on-pay vote is advisory,Company to eliminate these supermajority voting requirements. The Board concluded that elimination of these supermajority voting provisions will both enhance Equitrans Midstream's corporate governance practices and therefore not binding onbe an effective way to maintain and enhance the accountability of the Company the Compensation Committee, orto its shareholders. Accordingly, the Board, upon the recommendation of Directors. However, the BoardCorporate Governance Committee, has unanimously determined that it is in the best interests of the Company to amend the Articles and the Compensation Committee valueBylaws to eliminate the opinions of the Company's shareholders and will consider the outcome of the recommendation in determining how frequently to ask our shareholders to vote on the compensation of our named executive officers.
You may cast your vote for your preference as to the frequency of holding shareholder advisory votes on executive compensation, by selecting every one year, two years, or three years, or you may abstain from voting.
80% supermajority voting requirements described above.
Equitrans Midstream Corporation - 20192021 Proxy Statement 5553
Conforming Changes to the Bylaws |
Equitrans Midstream's Bylaws also currently include 80% supermajority voting provisions relating to shareholder amendments, consistent with the provisions that presently exist under the Articles. Conditional upon approval by the shareholders of the amendment to the Articles as described in this proposal, the Board of Directors has voted to similarly remove the related 80% supermajority voting standards from the Bylaws for consistency with the proposed amendment to the Articles.
Complete Text of Proposed Amendment |
The general descriptions of the proposed amendments to the Articles and Bylaws are qualified in their entirety by reference to the full text of the proposed amendments to the Articles and Bylaws, which are provided as Appendices C and D to this proxy statement. Proposed additions are double-underlined, and proposed deletions are stricken through.
REPORT OF THE AUDIT COMMITTEE |
The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company's accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company's independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee's charter guides the Committee's duties and responsibilities. The Audit Committee charter, which was adoptedamended in November 2018,December 2020, is available on the Company's website at www.equitransmidstream.com. As described in the charter, management is responsible for the internal controls and accounting and financial reporting processes of the Company. The independent registered public accounting firm is responsible for expressing opinions on the conformity of the Company's audited consolidated financial statements with generally accepted accounting principles and when applicable, on the effectiveness of the Company's internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes.
The Committee is composed of three non-employee, independent members of the Board of Directors. No member currently serves on more than onetwo other public company audit committee.committees. The Board has determined that each of Kenneth M. Burke, Margaret K. DormanD. Mark Leland and Robert F. Vagt is an audit committee financial expert, as that term is defined by the SEC. The members of the Committee are not professionally engaged in the practice of auditing or accounting. The Committee's considerations and discussions referred to below do not assure that the audit of the Company's financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company's auditors are in fact "independent."
In fiscal year 2018, following the Separation on November 12, 2018,2020, we fulfilled, our responsibilities inthrough the performance offollowing, our oversight responsibilities with respect to financial statement and disclosure matters (including oversight of the Company's processes and policies regarding risks to the financial reporting process, financial risks, risks to the Company's internal control system and information
54 Equitrans Midstream Corporation - 2021 Proxy Statement
technology and cybersecurity risks), the Company's relationship with its independent registered public accounting firm, the Company's internal audit function through the following:and compliance matters:
Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Equitrans Midstream Corporation 20182020 Annual Report on Form 10-K.
56 Equitrans Midstream Corporation - 2019 Proxy Statement
This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
This report has been furnished by the Audit Committee of the Board of Directors.
Kenneth M. Burke, ChairMargaret K. DormanD. Mark Leland
Robert F. Vagt
Equitrans Midstream Corporation - 20192021 Proxy Statement 5755
ITEM NO. 4 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Board of Directors recommends a voteFOR ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for |
The Audit Committee is responsible for the appointment and oversight of our independent registered public accounting firm and is involved in the selection of the lead engagement partner. The Committee has appointed Ernst & Young LLP (Ernst & Young) as the Company's independent registered public accounting firm to examine the consolidated financial statements of the Company and its subsidiaries for the calendar year 2019.2021. Ernst & Young has audited our financial statements forsince we became an independent publicly traded company in 2018, and EQM's financial statementswas the auditor of EQM, our former publicly traded subsidiary, since its initial public offering in 2012 and was the auditor of our former parent company for many years. InAs an annual matter, in deciding whether to reappoint Ernst & Young, the Audit Committee evaluatedevaluates the firm's qualifications and performance, considering, among other things, the quality of services, sufficiency of resources, effectiveness of communications, and knowledge of the industry.industry and the Company including its personnel, processes, accounting systems and risk profile, as well as its independence.
Shareholder approval is not required for the appointment of our independent accounting firm. However, the Board is submitting the appointment for ratification by the Company's shareholders as a matter of good corporate governance. If our shareholders do not ratify the appointment of Ernst & Young, the Audit Committee will consider the appointment of another independent accounting firm for the following year. Whether or not our shareholders ratify the appointment of Ernst & Young, the Audit Committee may appoint a different independent accounting firm at any time if it determines that such a change would be appropriate.
Representatives of Ernst & Young are expected to be present atparticipate in the annual meeting to respond to appropriate questions and to make a statement if they desire to do so.
The following chart details the fees billed or services rendered to the Company by Ernst & Young during 20182020 and 2019 (excluding the fees billed to EQM prior to the closing of the EQM Merger, as described below):
2020 | 2019 | |||
Audit Fees(1) | $1,391,073 | $662,373 | ||
| | | | |
Audit-Related Fees(2) | $51,850 | $68,960 | ||
| | | | |
Tax Fees | — | — | ||
| | | | |
All Other Fees(3) | $193,819 | $567,925 | ||
| | | | |
Total | $1,636,742 | $1,299,258 | ||
| | | | |
| | | | |
| | | | |
| | | | |
56 Equitrans Midstream Corporation - 2021 Proxy Statement
The Audit Committee has adopted a Policy Relating to Services of Registered Public Accountant under which the Company's independent accounting firm is not allowed to perform any service that may have the effect of jeopardizing the independent accounting firm's independence. Without limiting the foregoing, the independent accounting firm may not be retained to perform the following:
58 Equitrans Midstream Corporation - 2019 Proxy Statement
All audit and permitted non-audit services for the Company and its subsidiaries (other than for EQM, its consolidated subsidiaries, related parties and its respective subsidiaries)affiliates prior to the closing of the EQM Merger) must be pre-approved by the Audit Committee. The Audit Committee has delegated specific pre-approval authority with respect to audit and permitted non-audit services to the Chair of the Audit Committee but only where pre-approval is required to be acted upon prior to the next Audit Committee meeting and where the aggregate audit and permitted non-audit services fees pre-approved under such policy since the last Audit Committee meeting are not more than $75,000. The Audit Committee encourages management to seek pre-approval from the Audit Committee at its regularly scheduled meetings. In 2018,2020, 100% of the professional fees required to be pre-approved complied with the above policy.
Ernst & Young LLP also served as the independent accounting firm for EQM during 2018. The2020. Prior to the closing of the EQM Merger on June 17, 2020, the Audit Committee of the EQM Board approvesof Directors of EQM's general partner approved all audit and permitted non-audit services pertaining to EQM, its consolidated subsidiaries, related parties and its subsidiaries.affiliates. All fees associated with such services arewere reported to the Company's Audit Committee at its next meeting. In connection with such services, the following fees were billed by Ernst & Young LLP:Young:
Equitrans Midstream Corporation - 20192021 Proxy Statement 5957
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | | ||||||||||||||||||||||||
| (A) | | (B) | | (C) | | | (A) | | (B) | | (C) | | |||||||||||||||||||
Equity Compensation Plans Approved by Shareholders(1) | | | 2,017,543 | (3) | | | 38.55 | (5) | | | 29,701,873 | (6) | | | | 4,595,619 | (3) | | | 38.55 | (5) | | | 28,597,724 | 6) | | ||||||
| | | | | | | | | | | | | | | ||||||||||||||||||
Equity Compensation Plans Not Approved by Shareholders(2) | | | 22,971 | (4) | | | N/A | | | 98,829 | | | | | 69,597 | (4) | | | N/A | | | 63,338 | | | ||||||||
| | | | | | | | | | | | | | | ||||||||||||||||||
Total | | | 2,018,714 | | | N/A | | | 29,800,702 | | | | | 4,665,216 | | | N/A | | | 28,661,062 | | | ||||||||||
| | | | | | | | | | | | | | |
Equitrans Midstream Corporation Directors' Deferred Compensation Plan |
The Equitrans Midstream Corporation Directors' Deferred CompensationDirector Plan was adopted by the Board of Directors in connection with the Separation and subsequently amended and restated in April 2020, to provide an opportunity for the members of the Board of Directors of Equitrans Midstream Corporation to defer payment of all or a portion of the fees to which they are entitled as compensation for their services as members of the Board. The Director Plan also administers the payment of stock units and phantom stock awarded to non-employee directors pursuant to the ETRN LTIP (or, as applicable, pursuant to long-term incentive plans administered by EQT prior to the Separation and converted into Company stock units and phantom stock in connection with the Separation).
Amounts in deferral accounts under the EQT Corporation 2005 Directors' Deferred Compensation Plan of any individuals who became members of the Board upon the Separation were transferred into a Deferral Accountdeferral account under the Equitrans Midstream Corporation Directors' Deferred CompensationDirector Plan in connection with the Separation.
6058 Equitrans Midstream Corporation - 20192021 Proxy Statement
ADDITIONAL INFORMATION |
Proposals, Board Recommendations, Vote Required, and Broker Non-Votes |
Only holders of record at the close of business on April 12, 2019,February 19, 2021, the record date for the annual meeting, are entitled to receive notice of and to vote at the annual meeting. Each share of Equitrans Midstream common stock and each Series A Preferred Share (on an as-converted basis) that you own as of the record date represents one vote, and shareholders do not have cumulative voting rights. At the close of business on April 12, 2019,February 19, 2021, Equitrans Midstream had 255,014,730433,931,154 shares of common stock outstanding and 30,018,446 Series A Preferred Shares outstanding. A quorum is necessary to conduct business at the annual meeting. A majority of the outstanding shares (including Series A Preferred Shares on an as-converted basis), present or represented by proxy, constitutes a quorum. You are part of the quorum if you have returned a proxy.
If you are a beneficial owner whose shares are held of record by a broker, bank or other holder of record, you have the right to direct your broker, bank or other holder of record in voting your shares. If you do not provide voting instructions, your shares will not be voted on any proposal for which the holder of record does not have discretionary authority to vote. This is called a broker non-vote. In these cases, the broker, bank or other holder of record can register your shares as being present at the annual meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under NYSE rules.
The following summarizes the voting requirements for each proposal:
Proposal | Board Recommendation | Vote Required | Broker Discretionary Voting Allowed | |||
Item No. 1:Election of directors, each for a one-year term expiring at the | FOR EACH NOMINEE | Majority of votes | No | |||
| | | | | | |
Item No. 2:Approval, on an advisory basis, of the compensation of our named executive officers for | FOR | Majority of votes | No | |||
| | | | | | |
Item No. 3:Approval | FOR | Majority of votes | No | |||
| | | | | | |
Item No. 4:Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for | FOR | Majority of votes | Yes | |||
| | | | | | |
For purposes of the approval of the proposals above, abstentions, broker non-votes and the failure to vote are not votes cast and, accordingly, have no effect on the outcome of such proposals, although brokers do have discretionary authority to cast a vote on Item No. 4 if no instructions are received.
Corporate Secretary Contact Information |
You may contact the Company's Corporate Secretary by sending correspondence to: Equitrans Midstream Corporation, 625 Liberty Avenue, Suite 2000, Pittsburgh,2200 Energy Drive, Canonsburg, Pennsylvania 15222, Attn:15317, Attention: Corporate Secretary.
Equitrans Midstream Corporation - 20192021 Proxy Statement 6159
Notice of Internet Availability of Proxy Materials |
The SEC permits us to electronically distribute proxy materials to shareholders. We have elected to provide access to our proxy materials and annual report to certain of our shareholders on the Internet instead of mailing the full set of printed proxy materials. On or about May 2, 2019,March 15, 2021, we will mail to certain shareholders a notice of Internet availability of proxy materials (eProxy Notice) containing instructions regarding how to access our proxy statement and annual report and how to submit your vote over the Internet. If you received an eProxy Notice by mail, you will not receive printed copies of the proxy materials and annual report in the mail unless you request them. If you received an eProxy Notice by mail and would like to receive a printed copy of our proxy materials, follow the instructions for requesting such materials included in the eProxy Notice.
Voting Instructions |
Voting Instructions for Shareholders of Record |
If your shares are registered directly in your name with the Company's transfer agent, American Stock Transfer & Trust Company, LLC (AST), you are considered the shareholder of record of those shares. The proxy materials have been sent directly to you by AST.Broadridge Financial Solutions, Inc. You may vote your shares at our annual meeting or by submitting your proxy by:
➢ Mail: completing the proxy card as outlined in the instructions on the card and mailing the card in the prepaid envelope provided; | ||
| ➢ Internet: following the instructions at the Internet site http:// | |
➢ Telephone: following the instructions for telephone voting after calling |
If you vote by submitting your proxy card, your shares will be voted as indicated on your properly completed unrevoked proxy card. If you return your proxy card but do not indicate how your shares should be voted on an item, the shares represented by your properly completed unrevoked proxy card will be voted as recommended by the Board of Directors.Board. If you do not return a properly completed proxy card and do not vote in person,electronically during the virtual annual meeting, by telephone or on the Internet, your shares will not be voted.
You may also vote electronically during the virtual meeting using your 16-digit control number included on your eProxy Notice or proxy card. In the case of Internet or telephone voting, you should have your proxy card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the proxy card by mail. Even if you plan to attendparticipate in the virtual annual meeting, we encourage you to vote by proxy as soon as possible.
See "Notice of Internet Availability of Proxy Materials" above if you received an eProxy Notice. If you receive an eProxy notice, you will only be able to vote over the Internet unless you request paper copies of the proxy materials.
62 Equitrans Midstream Corporation - 2019 Proxy Statement
Voting Instructions for Beneficial Owners |
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the beneficial owner of shares held in street name. You should receive an eProxy Notice or a vote instruction form (VIF) together with copies of the proxy statement and annual report from your broker, bank or other holder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank or other holder of record in voting your shares by following the instructions included in the mailing on how to submit your voting instructions, including by:
➢ Mail: completing the VIF as outlined in the instructions on the form and mailing the form in the prepaid envelope provided; | ||
➢ Internet: following the instructions at the Internet site http://www.proxyvote.com; or | ||
➢ Telephone: following the instructions for telephone voting after calling |
60 Equitrans Midstream Corporation - 2021 Proxy Statement
See "Proposals, Board Recommendations, Vote Required, and Broker Non-Votes" above for the right of brokers, banks and other holders of record to vote on routine matters for which they have not received voting instructions.
Please review your VIF for the date by which your instructions must be received in order for your shares to be voted. You may also vote in person atelectronically during the virtual annual meeting if you obtain a legal proxy fromusing the instructions provided by your broker, bank, trustee or other holder of record and present it to the judges of election with your ballot.nominee. In the case of Internet or telephone voting, you should have your VIF in hand and retain the form until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the VIF by mail.
If your shares are held through the Equitrans Midstream Corporation Employee Savings Plan (the Employee Savings Plan) or the Equitrans Midstream Corporation 2018 Long-Term Incentive Plan (the ETRN LTIP),LTIP, see "Voting Shares Held Through the Employee Savings Plan" and "Voting Restricted Shares Held Through the ETRN LTIP" below for instructions regarding how to vote your shares and the right of the holders of record to vote your shares on matters for which they have not received voting instructions.
See "Notice of Internet Availability of Proxy Materials" above if you received an eProxy Notice. If you receive an eProxy notice, you will only be able to vote over the Internet unless you request paper copies of the proxy materials.
Voting Shares Held Through the Employee Savings Plan |
If you hold shares through the Employee Savings Plan, you will receive a separate proxy card, proxy statement and annual report. You must use this separate proxy card to instruct the trustee of the Employee Savings Plan onregarding how to vote your shares held in the plan. You may instruct the trustee to vote your shares by:
➢ Mail: completing the proxy card as outlined in the instructions on the card and mailing the card in the prepaid envelope provided; | ||
➢ Internet: following the instructions at the Internet site http:// | ||
➢ Telephone: following the instructions for telephone voting after calling |
If you do not return a proxy card or if you return a proxy card with no instructions, the trustee will vote your shares in proportion to the way other plan participants votedvote their shares. Please note that the proxy cards for the Employee Savings Plan have an earlier return date. Please review your proxy card for the date by which your instructions must be received in order for your Employee SavingsSaving Plan shares to be voted.
Equitrans Midstream Corporation - 2019 Proxy Statement63
In the case of Internet or telephone voting, you should have your proxy card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the proxy card by mail.
Voting Restricted Shares Held Through the ETRN LTIP |
If you hold restricted shares through the ETRN LTIP, you will receive a separate proxy card, proxy statement, and annual report. You must use this separate proxy card to instruct the ETRN LTIP administrator onregarding how to vote your restricted shares held in the plan. You may instruct the administrator to vote your shares by:
➢ Mail: completing the proxy card as outlined in the instructions on the card and mailing the card in the prepaid envelope provided; | ||
➢ Internet: following the instructions at the Internet site http:// | ||
➢ Telephone: following the instructions for telephone voting after calling |
If you return a proxy card with no instructions, the administrator or its designee will vote your shares as recommended by the Board of Directors.Board. If you do not return a proxy card, your shares will not be voted. Please note that the proxy cards for the ETRN LTIP have an earlier return date. Please review your proxy card for the date by which your instructions must be received in order for your shares to be voted.
Equitrans Midstream Corporation - 2021 Proxy Statement61
In the case of Internet or telephone voting, you should have your proxy card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the proxy card by mail.
How to Change Your Vote |
If you are a shareholder of record, you may revoke your proxy before polls are closed at the meeting by:
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record. Your last validly submitted vote is the vote that will be counted. If the meeting is postponed or adjourned, your proxy will still be good and may be voted at the postponed or adjourned meeting. You will be able to change or revoke your proxy until it is voted.
64 Equitrans Midstream Corporation - 2019 Proxy Statement
Receiving More Than One Proxy Card and/or VIF |
If you receive more than one proxy card as a shareholder of record, you have shares registered differently in more than one account. We encourage you to have all accounts registered in the same name and address whenever possible. You can do this by contacting our transfer agent, American Stock Transfer & Trust Company, LLC, at 6201 15th Avenue, Brooklyn, NY 11219, at its toll free number (1-800-937-5449), by email at help@astfinancial.com, or on its website www.astfinancial.com. If you receive more than one proxy card, it is important that you return each proxy card by the applicable deadline with voting instructions for your votes to be counted.
If you receive more than one VIF, please contact the broker, bank or other holder of record holding your shares to determine whether you can consolidate your accounts.
Voting on Other Matters |
Since no shareholder has indicated an intention to present any matter not included in this proxy statement to the annual meeting in accordance with the advance notice provision in the Company's bylaws,Bylaws, the Board is not aware of any other proposals for the meeting. If another proposal is properly presented, the persons named as proxies will vote your returned proxy in their discretion.
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You may attendparticipate in the virtual annual meeting if you were a shareholder on April 12, 2019. Seating is limited andFebruary 19, 2021. You will be offeredable to shareholders based on when we receiveparticipate in the annual meeting online and submit your request for admission. If you plan to attendquestions during the meeting by visiting www.virtualshareholdermeeting.com/ETRN2021. You also will be able to vote your shares electronically at the annual meeting (other than shares held through the ETRN LTIP or the Employee Savings Plan, which must be voted prior to the meeting). Information regarding the rules of conduct at the annual meeting will be available on the virtual meeting platform during the annual meeting.
To participate in the annual meeting, you will need to have an admission ticket. You may request an admission ticket by checking the appropriate box16-digit control number included on your eProxy Notice, on your proxy card or on the VIF that accompanied your proxy materials. The annual meeting webcast will begin promptly at 9:00 a.m. Eastern Time on April 27, 2021, and shareholders will be able to log in beginning at 8:45 a.m. Eastern Time on April 27, 2021. We encourage you to access the meeting prior to the start time.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
62 Equitrans Midstream Corporation - 2021 Proxy Statement
Voting During the Annual Meeting |
Shares registered directly in your name as the shareholder of record may be voted electronically during the annual meeting. If you choose to vote your shares online during the annual meeting, please follow the instructions provided on your eProxy Notice or the proxy card to log in to www.virtualshareholdermeeting.com/ETRN2021. You will need the 16-digit control number included on your eProxy Notice or on your proxy card. If your shares are held in a stock brokerage account or by writing to our Corporate Secretary. See "Corporate Secretary Contact Information" above. If a bank, broker bank or other holder of record, holdsyou may also vote electronically during the virtual annual meeting using your shares, you must include proof of16-digit control number provided by your ownership of Equitrans Midstream stock as of April 12, 2019, such as a copy of your brokerage account statement or an omnibus proxy, which you can obtain from yourbank, broker bank or other holder of record, and we will sendrecord.
Even if you an admission ticket.
Shareholders must present a form of photo identification, such as a driver's license, in orderplan to be admitted to the annual meeting. No cameras, laptops, recording equipment, other similar electronic devices, signs, placards, briefcases, backpacks, large bags or packages will be permittedparticipate in the annual meeting. Themeeting, the Company reserves the rightstrongly recommends that you vote your shares in advance as described above so that your vote will be counted if you later decide not to deny admittance to any shareholder who attempts to bring any such item intoparticipate in the annual meeting. Small purses are permissible, but they
Questions |
During the live question and any bags or packages permitted in the meeting room will be subject to inspection. The useanswer portion of mobile phones or other communication devices, tablets and similar electronic devices during the annual meeting is prohibited. Such devices must be turned off and put away before entering the meeting room. All security procedures and instructions require strict adherence. By attending the annual meeting, shareholders agree to abide by the agenda and procedures for the annual meeting, copies ofmay submit questions, which will be distributedanswered as they come in, as time permits. If you wish to attendeessubmit a question, you may do so by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/ETRN2021, type your question into the meeting. Failure"Ask a Question" field, and click "Submit." Only questions pertinent to abide by these rules, as determined in the sole discretion ofmeeting matters will be answered during the meeting, chairperson,subject to time constraints.
Technical Difficulties |
We will have technicians ready to assist you with any technical difficulties you may result in your removal fromhave accessing the virtual annual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting login page.
Other Matters |
Solicitation of Proxies |
We are soliciting proxies primarily by use of the mails. However, we may also solicit proxies in person, by telephone, by facsimile, by courier or by electronic means. To the extent that our directors, officers or other
employees participate in this solicitation, they will not receive any compensation for their participation, other than their normal compensation. D.F. King & Co., Inc. assists us with the solicitation for a fee of $10,000 plus reasonable out-of-pocket expenses. We also reimburse brokerage firms and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to shareholders and obtaining their proxies.
Equitrans Midstream Corporation - 2019 Proxy Statement65
The Company bears all costs associated with this proxy solicitation.
Shareholder Proposals and Director Nominations |
Under SEC rules, eligible shareholders may submit proposals for inclusion in the proxy statement for our 20202022 annual meeting. Shareholder proposals must comply with the requirements established by the SEC and must be submitted in writing and received by our Corporate Secretary on or before the close of business on January 3, 2020November 15, 2021 (for them to be considered for inclusion in the 20202022 proxy statement).
If you would like to present a matter not included in our proxy statement for consideration at our 20202022 annual meeting, including nominations for director candidates, you must send advance written notice to our Corporate Secretary. According to our bylaws,Bylaws, the Corporate Secretary must receive notice of any matter or nominations to be presented at the 20202022 annual meeting no earlier than the close of business on February 12, 2020December 28, 2021 (the 120th day prior to June 11, 2020,April 27, 2022, the one-year anniversary of this year's annual meeting) and no later than the close of business on March 13, 2020January 27, 2022 (the 90th day prior to June 11, 2020)April 27, 2022). Any matter or nomination must comply with our bylaws.Bylaws.
Under our proxy access bylawsBylaws provision, a shareholder, or group of twenty or fewer shareholders, in each case owning continuously for at least three years as of both the date the notice is received by us and the record date for the annual meeting, shares of the Company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in our proxy statement director nominees
Equitrans Midstream Corporation - 2021 Proxy Statement63
constituting the greater of (i) two and (ii) 20% of the Board, provided that such nominations are submitted in writing and received by our Corporate Secretary no earlier than the close of business on theOctober 16, 2021 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meetingmeeting) and no later than the close of business on theNovember 15, 2021 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting. Shareholders will not be able to take advantage of our proxy access bylaws to satisfy the ownership requirement until our shareholders' meeting in 2023 (which is three years from the Separation)meeting).
In addition, the Board's Corporate Governance Committee will consider in its normal course candidates recommended by the Company's shareholders. If the Corporate Governance Committee determines to nominate as a director an individual recommended by a shareholder, then the recommended individual will be included on the Company's slate for the next annual proxy statement. To make such a recommendation, you must comply with the requirements described under "Corporate Governance and Board Matters — Director Nominations" on page 1314 of this proxy statement.
Cautionary Statements |
Disclosures in this proxy statement may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe," "target" and other words of similar meaning in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this proxy statement include the matters discussed regarding the expectation of performance under compensation plans, anticipated financial and operational performance of the Company and its subsidiaries and the expected positive impacts of the EQT Global GGA, including expected increases in MVCs. These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and are beyond the Company's control. The risks and uncertainties that may affect the operations, performance and results of the Company's business and forward-looking statements include, but are not limited to, those set forth in the Company's annual report on Form 10-K for the year ended December 31, 2020.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not intend to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Websites |
Website addresses referenced in this proxy statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this proxy statement.
6664 Equitrans Midstream Corporation - 20192021 Proxy Statement
APPENDIX A |
Related Person Transactions with EQT |
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Prior to the Separation,As of February 22, 2021, EQT was the Company's sole shareholder. Following the Separation, EQT retainedheld a 19.9%5.8% ownership interest in the Company.Company (excluding the Company's Series A Preferred Shares). Therefore, EQT is a related person of the Company under SEC rules.
Separation and Distribution Agreement. On November 12, 2018, the Company, EQT and EQT Production Company a wholly-owned subsidiary of EQT,(EPC) entered into a separation and distribution agreement (the Separation and Distribution Agreement), pursuant to which, among other things, EQT effected the Separation. The Separation and Distribution Agreement provides for, among other things, indemnification obligations designed to make the Company financially responsible for substantially all liabilities that may exist relating to the midstream business, that was transferred to the Company whether incurred prior to or after the Separation. Payments to EQT for Separation and other transaction costs in 2018 were $53.3 million, which included costs related to the 2018 Drop-Down Transaction (defined below) and the EQM-RMP Merger discussed below.
Transition Services Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into a transition services agreement, as amended, (the Transition Services Agreement). Pursuant to the Transition Services Agreement, each party agreed to provide certain services to the other on an interim, transitional basis, including services related to information technology, the administration of certain employee benefits and other corporate support services. The Company and EQT agreed to pay the other a fee for these services on a monthly basis. The Transition Services Agreement will terminate on the earliest to occur of (a) the expiration of the term of the last service provided under it and (b) the date that is the one year anniversary of the Separation, subject to each party's right to terminate a service prior to the scheduled expiration date.
Tax Matters Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into a tax matters agreement (the Tax Matters Agreement) that governs the parties' respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of EQT's distribution of 80.1% of the distributionthen outstanding shares of the Company's common stock to EQT shareholders (the Distribution) made in connection with the Separation and certain related transactions to qualify as generally tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and assistance and cooperation with respect to tax matters. In addition, the Tax Matters Agreement imposesthrough November 12, 2020, imposed certain restrictions on the Company and its subsidiaries, including restrictions on share issuances, business combinations, sales of assets and similar transactions, that arewere designed to preserve the tax-free status of the distributionDistribution and certain related transactions. The Tax Matters Agreement provides special rules that allocate tax liabilities in the event that the distributionDistribution made in connection with the Separation, together with certain related transactions, are not tax-free. In general, under the Tax Matters Agreement, each party is expected to be responsible for any taxes, whether imposed on the Company or EQT, that arise from (i) the failure of the distribution,Distribution, together with certain related transactions, to qualify for tax-free treatment, or (ii) if certain related transactions were to fail to qualify for their intended tax treatment, in each case, to the extent that the failure to qualify is attributable to actions, events or transactions relating to such party's respective stock, assets or business or a breach of the relevant representations or covenants made by that party in the Tax Matters Agreement.
Employee Matters Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into an employee matters agreement (the Employee Matters Agreement). Pursuant to the Employee Matters Agreement, the Company and EQT allocated liabilities and responsibilities related to employment and compensation and benefits matters and generally agreed to the Company's assumption of liabilities associated with employees transferred from EQT to the Company (and certain former employees associated with the midstream business) in connection with the Separation. The Company also agreed to establish certain retirement and welfare plans that mirrored similar plans in effect at EQT, and EQT and the Company agreed to the adjustment and replacement of equity compensation awards denominated in EQT common stock in part with awards denominated in Equitrans Midstream common stock.
Shareholder and Registration Rights Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into a shareholder and registration rights agreement (the Registration Rights Agreement) with EQT, pursuant to which the Company agreed that, upon the request of EQT, the Company willwould use commercially reasonable efforts to effect the registration of the Company's shares heldof the Company retained by EQT in connection with the Separation (the Retained Interest), and EQT agreed to vote any such shares comprising the Retained Interest then held by the Company in proportion to the votes cast by the Company's other shareholders. EQT granted the Company a proxy to vote its shares comprising the Retained Interest then held by the Company in such proportion. The Registration Rights Agreement also includes provisions to facilitate the transferability of EQT's retained interest in the Company.Retained Interest.
EQGP's, EQM's and RMP's Omnibus Agreements with EQT. Prior to the Separation, EQGP (now a subsidiary of EQM), EQM and RMP (nowRM Partners, LP (then known as Rice Midstream Partners LP and now an operating subsidiary of EQM)the Company) (RMP) each had an omnibus agreement with EQT. Pursuant to the omnibus agreements, EQT performed centralized corporate general and administrative services for EQGP, EQM and RMP and provided a license for EQGP's and EQM's use of the name "EQT" and related marks in connection with their businesses.RMP. EQGP, EQM and RMP reimbursed EQT for the expenses incurred by EQT in providing these services. EQM's and RMP's omnibus agreements also provided for certain indemnification obligations between EQM and RMP on the one hand, and EQT on the other hand. On November 12, 2018, EQT terminated the EQGP, EQM and RMP omnibus agreements. Certain indemnification obligations of EQT, EQM and RMP remain in effect following the termination and have been memorialized pursuant to (i) the amended and restated omnibus agreement, dated November 13, 2018, among EQT, EQM and EQM's former general partner, and (ii) the second amended and restated omnibus agreement, dated November 13, 2018, among EQT, EQT RE, LLC, RM Partners LP,RMP, EQM Midstream Management LLC, the general partner of RMP, and EQM Poseidon Midstream LLC. The Company is generally responsible for these surviving obligations of EQT pursuant to the Separation and Distribution Agreement. Payments to EQT under the omnibus agreements in 2018 were $49.8 million for operating and maintenance expense and $85.1 million for selling, general and administrative expense.
EQGP Working Capital Facility with EQT. Prior to the Separation, EQGP had a working capital loan agreement with EQT, through which EQT agreed to make interest-bearing loans available in an aggregate principal amount not to exceed $50 million outstanding at any one time (the EQGP Working Capital Facility). Borrowings outstanding under the EQGP Working Capital Facility with EQT were presented in accounts payable as an amount due to related party in the consolidated balance sheets. On November 12, 2018, EQGP repaid $3.2 million of borrowings outstanding under the facility, and EQT terminated the working capital loan agreement. During the period from January 1, 2018 through November 12, 2018, the maximum outstanding borrowing was $3.2 million, the average daily balance was approximately $0.2 million and the weighted average annual interest rate was 3.5%.
EQM 364-Day Facility. Prior to the Separation, EQM had a $500 million, 364-day, uncommitted revolving loan agreement with EQT (the EQM 364-Day Facility). Interest accrued on outstanding borrowings at an interest rate equal to the rate then applicable to similar loans under EQM's revolving credit agreement with the largest aggregate commitment amount to which EQM was then a party, less the sum of (i) the then applicable commitment fee under such agreement and (ii) 10 basis points. On November 12, 2018, EQT terminated the EQM 364-Day Facility. There were no borrowings outstanding at any time during the year ended December 31, 2018.
Secondment Agreement with EQT. On December 7, 2017, EQT, EQT Gathering, LLC (EQT Gathering), Equitrans, L.P. (Equitrans), EQM and EQM's former general partner entered into a secondment agreement (the EQT Secondment Agreement), pursuant to which available employees of EQT and its affiliates could be seconded to EQM and its subsidiaries to provide operating and other services with respect to EQM's business under the direction, supervision and control of EQM or its subsidiaries. EQM reimbursed EQT and its affiliates for the services provided by the seconded employees pursuant to EQM's Omnibus Agreement with EQT. On November 12, 2018, EQT terminated the EQT Secondment Agreement.
Shared Use Agreement. In connection with the Separation, EQM executed a shared use agreement with EQT Production Company, an indirect wholly-owned subsidiary of EQT, EQT Production Company (EPC),EPC, pursuant to which, subject to the terms and conditions thereof, each party is entitled to access and use certain real property (including rights-of-way), equipment, facilities and records identified therein of the other party.
Commercial Agreements with EQT |
Commercial Agreements with EQT.In the ordinary course of business, the Company through EQM, engages in transactions with EQT and its affiliates,subsidiaries, including, but not limited to, gas gathering agreements, transportation service and precedent agreements, storage agreements, and water service agreements. For the year ended December 31, 2018,2020, the Company's operating revenues under these agreements were $1.1 billion.approximately $964.2 million. These agreements under which 2020 operating revenues were recognized by the Company are described below.
EQT Global GGA. On February 26, 2020, the Company and EQT entered into the EQT Global GGA, a gas gathering and compression agreement for the provision of certain gas gathering services to EQT in the Marcellus and Utica Shales of Pennsylvania and West Virginia, which was subsequently amended on August 26, 2020 and November 1, 2020. The EQT Global GGA expires on December 31, 2035 and will renew annually thereafter unless terminated by EQT or the Company pursuant to its terms. The EQT Global GGA provides for, among other things, a 3.0 Bcf per day minimum volume commitment (MVC), which gradually steps up to a 4.0 Bcf per day for several years following the full in-service date of the MVP, and the dedication of a substantial majority of EQT's core acreage in Pennsylvania and West Virginia to the Company. Under the EQT Global GGA, EQT will receive certain gathering fee relief (as described below) over a period of three years following the full in-service date of the MVP. Additionally, the EQT Global GGA provides for potential cash bonus payments payable by EQT to the Company during the period beginning on the first day of the calendar quarter in which the MVP in-service date occurs through the earlier of the twelfth calendar quarter from that point or the calendar quarter ending December 31, 2024. The potential cash bonus payments are conditioned upon the quarterly average of certain Henry Hub natural gas prices exceeding certain price thresholds. The gathering fees payable by EQT to the Company set forth in the EQT Global GGA are subject to potential reductions (i.e., the gathering fee relief) for certain contract years as set forth in the EQT Global GGA, conditioned upon the in-service date of the MVP, which provide for estimated aggregate fee relief of approximately $270 million in the first year after the in-service date of the MVP, approximately $230 million in the second year after the in-service date of the MVP and approximately $35 million in the third year after the in-service date of the MVP. In addition, if the MVP in-service date has not occurred by January 1, 2022, EQT has an option, exercisable for a period of twelve months (or such shorter period if the in-service date of the MVP occurs), to forgo approximately $145 million of the fee relief in the first year after the MVP in-service date and approximately $90 million of the fee relief in the second year after the MVP in-service date in exchange for a cash payment from the Company to EQT in the amount of approximately $196 million (the EQT Cash Option). As consideration for the additional rate relief subject to the EQT Cash Option, the Company purchased certain shares of the Company's common stock that were held by EQT (as described below).
On February 26, 2020, in connection with the execution of the EQT Global GGA, each of the Jupiter Gas Gathering Agreement, the WG-100 Gas Gathering Agreement, the MPPS Gas Gathering Agreement, the AMTT Gathering Agreement, the Stonewall Valley Gathering Agreement, the River Pad Gas Gathering Agreement, the Claysville Gas Gathering Agreement, the RMP PA Gathering Agreement, the Cracker Jack Gathering Agreement, the Cash Dollar Gathering Agreement, the ANGS Gathering Agreement, the Windridge Gathering Agreement, the ASR Gathering Agreement, the State Gamelands Gathering Agreement (as each is defined below) and the Letter Agreement regarding the Connection of Kentor, Carpenter, Shipman and Beazer Wells Pads to Jupiter Gathering System, dated March 1, 2019, by and among Rice Drilling B LLC, EQM Gathering Opco, LLC, an indirect wholly owned subsidiary of the Company (EQM Gathering Opco), and Equitrans, L.P. was terminated.
EQM Gas Gathering Agreements. On April 30, 2014, EQT entered into a gas gathering agreement (the Jupiter Gas Gathering Agreement) with EQT Gathering, LLC, an indirect wholly owned subsidiary of EQT (EQT Gathering) for gathering services on the Jupiter gathering system (Jupiter). The Jupiter Gas Gathering Agreement hashad a 10-year term (with year-to-year rollovers), which began on May 1, 2014. Under the agreement, EQT subscribed for approximately 225 MMcf per day of firm compression capacity which was available on Jupiter at that time. In the fourth quarter of 2014, EQM placed one compressor station in service and added compression at the two existing compressor stations in Greene County, Pennsylvania. This expansion added approximately 350 MMcf per day of compression capacity. EQT's firm capacity subscribed under the Jupiter Gas Gathering Agreement increased by 200 MMcf per day effective December 1, 2014 and by 150 MMcf per day effective January 1, 2015. In the fourth quarter of 2015, EQM completed an additional expansion project which brought the total Jupiter compression capacity to approximately 775 MMcf per day. EQT's firm capacity subscribed under the Jupiter Gas Gathering Agreement increased by approximately 50 MMcf per day effective October 1, 2015 and approximately 150 MMcf per day effective November 1, 2015. The Jupiter Gas Gathering Agreement providesprovided for separate 10-year terms of up to 10 years from the applicable in service date (with year-to-year rollovers) for the compression capacity associated with each expansion project. EQT also agreed to pay a monthly usage fee for volumes gathered in excess of firm compression capacity. In connection with the closing of EQT's contribution of Jupiter to EQM Gathering Opco, LLC, an indirect wholly owned subsidiary of EQM (EQM Gathering Opco), on May 7, 2014, the Jupiter Gas Gathering Agreement was assigned to EQM Gathering Opco.
On March 10, 2015, EQT entered into two gas gathering agreements with EQT Gathering for gathering services on the NWVCompany's Northern West Virginia Gathering system.System (NWV Gathering). The gathering agreement for gathering services on the wet gas header pipeline (WG-100 Gas Gathering Agreement) hashad a 10-year term (with year-to-year rollovers), beginning March 1, 2015. Under the agreement, EQT hashad subscribed for approximately 400 MMcf per day of firm capacity currentlythen available on the wet gas header pipeline. EQT also agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. In connection with the closing of theEQM's acquisition of NWV Gathering Acquisition,from EQT in 2015, the WG-100 Gas Gathering Agreement was assigned to EQM Gathering Opco.
The gas gathering agreement for gathering services in the Mercury, Pandora, Pluto and Saturn development areas (MPPS Gas Gathering Agreement) hashad a 10-year term (with year-to-year rollovers), beginning March 1, 2015. Under the agreement, EQT initially subscribed for approximately 200 MMcf per day of firm capacity then available in the Mercury development area, 40 MMcf per day of firm capacity in the Pluto development area and 220 MMcf per day of firm capacity in the Saturn development area. EQT's firm capacity subscribed under the MPPS Gas Gathering Agreement increased by 100 MMcf per day effective December 1, 2015 related to the completedan expansion project in the Pandora development area. An additional expansion project brought the total Saturn compression capacity to 300 MMcf per day effective November 1, 2016. EQT hashad agreed to separate 10-year terms (with year-to-year rollovers) for the compression capacity associated with each expansion project.project under the MPPS Gas Gathering Agreement. EQT also agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. In connection with the closing of theEQM's acquisition of NWV Gathering Acquisition,from EQT in 2015, the MPPS Gas Gathering Agreement was assigned to EQM Gathering Opco.
Effective as of October 1, 2016, EQT entered into a 10-year (with year-to-year rollovers) gas gathering agreement for services in the Applegate/McIntosh and Terra development areas in southwestern Pennsylvania and the Taurus development area in northern West Virginia (the AMTT Gathering Agreement). Under the agreement, EQT initially subscribed for total firm capacity of approximately 235 MMcf per day. Effective September 1, 2018, the contracted firm capacity under the agreement increased to an aggregate of 365 MMcf per day during the remaining life of the contract in connection with, among other things, an expected expansion project in the Applegate/McIntosh development area. EQT also agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. In connection with the closing of EQM's acquisition of certain gathering and transmission assets from EQT in October 2016, the AMTT Gathering Agreement was assigned to EQM Gathering Opco.
Effective as of April 1, 2019, EQT and EPC entered into a gas gathering agreement (the Stonewall Valley Gathering Agreement) with EQM for gathering services with respect to production from natural gas wells from EQT's Stonewall Valley Unit, Mingo Unit and Kevech Unit, all located in Washington County, Pennsylvania. The Stonewall Valley Gathering Agreement had a 10-year term (with year-to-year rollovers).
As a result of the 2017 merger (the Rice Merger) among EQT, its wholly-owned merger subsidiary, and Rice Energy, (the Rice Merger), the surviving entity acquired all of Rice Energy's rights and assumed all of Rice Energy's obligations under a second amended and restated gas gathering and compression agreement executed on March 31, 2017 with EQMRice Olympus Midstream LLC (the Ohio Gathering Agreement), which became a wholly-owned subsidiary of EQM on May 22, 2018 as a result of the 2018 Drop-Down Transaction.2018. Pursuant to the agreement,Ohio Gathering Agreement, EQM provides gathering services to EQT in Belmont County, Ohio. The agreement has a 15-year term that began on December 22, 2014 (with month-to-month rollovers). Under the agreement, Rice Energy initially subscribed for total guaranteed capacity of approximately 100 MMcf per day to the Dominion East Ohio delivery point. Over the course of the agreement, new delivery points came online: Texas Eastern Pipeline (April 30, 2015; 200 MMcf per day), Rockies Express Pipeline (December 31, 2015; 225 MMcf per day), ET Rover Pipeline (September 1, 2017; 100 MMcf per day) and Leach Xpress Pipeline (November 1, 2017; 200 MMcf per day). With the foregoing expansion, the total guaranteed capacity under the agreement increased to approximately 825 MMcf per day across all delivery points. EQT also delivers gas to the Goliath delivery point on an interruptible basis. EQT will paypays a fixed fee (based on the applicable receipt and delivery points) per dekatherm of natural gas delivered. In addition to gathering services, EQM Olympus agreed to provide interconnection and compression services for an additional fee.
On June 8, 2017, EQT and two third partythen third-party producers entered into a 15-year (with year-to-year rollovers) gas gathering agreement with EQM Gathering Opco for gathering services on the Marianna Gathering System (the Marianna Gas Gathering Agreement), pursuant to which EQT will paypays a fixed fee per dekatherm of natural gas, subject to certain annual and other adjustments, gathered by EQM Gathering Opco. Under the Marianna Gas Gathering Agreement, EQT alsoand the other current producer on the system have dedicated approximately 10,10014,200 acres and any future acreage EQT acquires within the dedicateddedication area during the term to EQM Gathering Opco.
On August 8, 2017, EQT entered into a 10-year (with year-to-year rollovers) gas gathering agreement with EQM Gathering Opco LLC for gathering services on the River Pad Gathering System (the River Pad Gas Gathering Agreement). Under the agreement, EQT hashad subscribed for approximately 30 MMcf per day of firm capacity that became available in the second quarter of 2018. Under the River Pad Gas Gathering Agreement,2018, dedicated certain EQT also dedicated approximately 30,000 acres and any future acreage EQT acquires within the dedicated area during the term to EQM Gathering Opco and agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity.
EQT Energy, LLC (EQT Energy), an indirect wholly owned subsidiary of EQT, is a party to a gas gathering agreement with EQM for interruptible service on EQM's FERC-regulated low pressure gathering system. The agreement has a primary term of one year and renews automatically for one-month periods, subject to 30 days prior written notice by either party to terminate. Service under this gathering agreement is fee based at the rate specified in EQM's tariff.
On February 12, 2018, EQT Energy and EPC executed a gas gathering agreement (the Hammerhead Gas Gathering Agreement) with EQM Gathering Opco to provide certain gathering and transmission services from receipt points on the Jupiter gathering system, Marianna gathering system and a gathering systemEQM's Hammerhead pipeline to EQT in Washington County,southwestern Pennsylvania and delivery into the Texas Eastern Pipeline and the Mountain Valley Pipeline (MVP).northwestern West Virginia. The Hammerhead Gas Gathering Agreement has a 20-year term (with year-to-year rollovers), which. The Hammerhead pipeline is expecteda 1.6 Bcf per day gathering header pipeline that is primarily designed to beginconnect natural gas produced in Pennsylvania and West Virginia to the fourth quarter of 2019 following the in-service date ofMVP, Texas Eastern Transmission and Dominion Transmission. The Company believes the Hammerhead gathering system (or, if later, thepipeline was placed in-service date of the MVP).effective August 1, 2020. Under the agreement, EQT has subscribed for approximately 1,200 million dekatherm (MDth) per day of firm gathering capacity during the life of the contract. The capacity reservation charge under the contract is fixed, subject to certain annual and other adjustments, including certain adjustments in the event the in-service date under the agreement has not occurred by the end of the third quarter of 2020. EQT has agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity.
Finally, on June 7, 2018, EQT Energy and EPC executed a gas gathering agreement with EQM for gathering services in the Claysville (Pisces) development area (the Claysville Gas Gathering Agreement). The Claysville Gas Gathering Agreement has a 10-year term (with year-to-year rollovers), which is expected to begin in the fourth quarter of 2019 following the in-service date of the Claysville (Pisces) Gathering System. Under the agreement, EQT initially subscribed for total firm capacity of approximately 200,000 MDth per day. The contracted firm capacity will increase to 300,000 MDth per day during the life of the contract. The capacity reservation charge under the contract is fixed, subject to certain annual and other adjustments. EQT has agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. Effective as of June 1, 2019, the parties agreed that the western receipt point on Jupiter would be removed from the Hammerhead project, and that associated capital would be redeployed in order to (i) connect the Hammerhead pipeline to the DTI TL-360 downstream pipeline, (ii) add a receipt point at Throckmorton with an associated maximum daily quantity of 600,000 Dth per day, and (iii) add incremental compression on the gathering system up to 1440 psig and extending high pressure-low pressure system upstream of the Throckmorton receipt point. These amendments were made in connection with other agreements of the parties relative to Claysville (Pisces) development area described below. The Company's and EQT's obligations under the Hammerhead Gas Gathering Agreement are subject to a pending contractual dispute that is currently being arbitrated. See "Hammerhead Pipeline" under "Outlook" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 23, 2021, for additional information.
On June 7, 2018, EQT Energy and EPC executed a gas gathering agreement with EQM for gathering services in the Claysville (Pisces) development area (the Claysville Gas Gathering Agreement). The Claysville Gas Gathering Agreement had a 10-year term (with year-to-year rollovers). Under the agreement, EQT initially subscribed for total firm capacity of approximately 200,000 MDth per day. The contracted firm capacity would have increased to 300,000 MDth per day during the life of the contract. The capacity reservation charge under the contract was fixed, subject to certain annual and other adjustments.
Legacy RMP Gas Gathering Agreements. As a result of theEQM's merger with RMP in July 2018 (the EQM-RMP Merger,Merger), the surviving entity acquired all of RMP's rights and assumed all of RMP's obligations under various gas gathering agreements with EQT and its affiliates, as described in detail below.
As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under a fixed price per unit gathering and compression agreement executed on December 22, 2014 with Rice Energy (which was acquired by EQT as a result of the Rice Merger) that expireswould have expired in December 2029.2029 (the RMP PA Gathering Agreement). Pursuant to the agreement, EQM gathersgathered natural gas on certain of the Washington and Greene Counties, Pennsylvania gathering systems acquired by EQM as a result of the EQM-RMP Merger and providesprovided compression services.services to EQT. Under the agreement, EQM chargescharged EQT a gathering fee of $0.30 per dekatherm and a compression fee of $0.07 per dekatherm per stage of compression, each subject to annual adjustment for inflation based on the Consumer Price Index. This agreement covers approximately 209,000 gross acres of EQT's acreage position in the dry gas core of the Marcellus Shale in southwestern Pennsylvania as of December 31, 2018 and, subject to certain exceptions and limitations pursuant to the gas gathering and compression agreement, any future acreage certain affiliates of EQT acquire within these counties.
Pursuant to the gas gathering and compression agreement, EQT will from time to time provide EQM with notice of the date on which it expects to require gas production to be delivered from a particular well pad. Subject to the provisions described in the following paragraph, EQM will be obligated to build out its gathering systems to such well pad and to install facilities to connect all wells planned for such well pad as soon as reasonably practicable, but in any event within one year of receipt of such notice, subject to extension for force majeure, including inability to obtain or delay in obtaining permits and rights of way.
EQM will be obligated to connect all of EQT's wells that produce gas from the area dedicated to EQM under the gas gathering and compression agreement that (i) were completed as of the closing date of RMP's IPO, (ii) were included in Rice Energy's initial development plan for drilling activity for the period from the closing date of RMP's IPO through December 31, 2017 or (iii) are within five miles of the gas gathering system acquired by EQM as a result of the EQM-RMP Merger on the date EQT provides EQM with notice that a new well pad is expected to require gathering services. For wells other than those described in the preceding sentence, EQM and EQT will negotiate in good faith an appropriate gathering fee. If EQM cannot reach agreement with EQT on a gathering fee for any such additional well, EQT will have the option to have EQM connect such well to its gathering systems for a gathering fee of $0.30 per dekatherm and bear the incremental cost of constructing the connection to such well in excess of the cost EQM would have incurred to connect a well located on the five-mile perimeter, or EQT will cause such well to be released from EQM's dedication under the gas gathering and compression agreement.
As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under a fixed price per unit gathering and compression agreement executed on December 18, 2015 with Rice Energy (which was acquired by EQT as a result of the Rice Merger) (the Cracker Jack Gathering Agreement). Pursuant to the agreement, EQM gathersgathered natural gas on the Washington County, Pennsylvania gathering system acquired by EQM as a result of the EQM-RMP Merger and providesprovided compression services to EQT. The current term of this agreement expireswould have expired in January 2021 with a 10-year extension term and renews on an annual basis after the expansion term. Under the agreement, EQM receivesreceived fixed gathering and compression fees per dekatherm, each subject to annual adjustment for inflation based on the Consumer Price Index. This agreement covers the Cracker Jack Area of Mutual Interest, which consists of approximately 29,000 gross acres of EQT's acreage position in Washington County (the CJ AMI) as of December 31, 2018. Upon notice from EQT, EQM will be obligated to connect additional EQT wells within the CJ AMI. Following receipt of all necessary permits and rights of way relating to such additional connections, EQM will have three weeks for completion of each mile of pipeline required for such connection, with the exception of any pipeline to be located less than one mile from its existing gathering system, for which the connection must be completed within eight weeks of receiving all necessary permits and rights of way.
Also, as a result of the EQM-RMP Merger, the surviving entityEQM assumed RMP's obligations under a 15-year, fixed price per unit gathering and compression agreement executed on October 21, 2015 with Rice Energy (which was acquired by EQT as a result of the Rice Merger) (the Cash Dollar Gathering Agreement). Pursuant to the agreement, EQM gathersgathered natural gas on the Washington County, Pennsylvania gathering system acquired by EQM as a result of the EQM-RMP Merger and providesprovided compression services to EQT. Under the agreement, EQM receivesreceived fixed gathering and compression fees per dekatherm, each subject to annual adjustment for inflation based on the Consumer Price Index. This agreement covers approximately 2,200 gross acres
Table of EQT's acreage position in Washington County as of December 31, 2018.Contents
Effective as of December 16, 2016, in connection with an acquisition by EQT, EQT assumed the obligations under the Appalachia North Gathering System Gas Gathering Agreement, to which RMP was a party prior to the EQM-RMP Merger.Merger (the ANGS Gathering Agreement). As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under this agreement to gather natural gas on the Washington County, Pennsylvania gathering system acquired by EQM as a result of the EQM-RMP Merger and provide compression services to EQT. Under the agreement, EQM receivesreceived fixed gathering and compression fees per dekatherm, each subject to annual adjustment for inflation based on the Consumer Price Index. The initial term of this agreement is until December 31, 2023 and it covers approximately 4,000 gross acres of EQT's acreage position in Washington County as of December 31, 2018.
Effective as of October 19, 2016, in connection with RMP's acquisition in October 2016 of certain midstream assets previously owned by affiliates of Vantage Energy, LLC, (the Vantage Midstream Asset Acquisition), RMP acquired Vantage Energy II Access LLC (Vantage Access), which became an indirect wholly-owned subsidiary of EQM as a result of the EQM-RMP Merger. Vantage Energy II Access LLC iswas party to a gas gathering agreement with an affiliate of EQT.EQT (the Windridge Gathering Agreement). Pursuant to the agreement, EQM gathersgathered natural gas on its Windridge gathering system and providesprovided compression and dehydration services to EQT. The initial term of this agreement expireswould have expired in December 2023, with monthly renewal terms thereafter.2023. Under the agreement, EQM receivesreceived fixed gathering, compression and dehydration fees per dekatherm, each subject to an annual adjustment for inflation based upon the Consumer Price Index. Under this agreement, EQT dedicatesdedicated the first 20,000 dekathermdekatherms per day of gas in Greene County, Pennsylvania to the Windridge gathering system, and may also deliver gas from the Utica formation or other locations outside the dedicated acreage, which will count towards EQT's dedication. Upon notice from EQT, EQM will be obligated to connect additional receipt and delivery points on the Windridge gathering system at EQT's sole cost.
Additionally, Vantage Energy II Access LLC is party to a letter agreement with an affiliate of EQT, among other parties, pursuant to which EQM facilitates the crossflow of EQT's gas into the Windridge gathering system from its Rogersville gathering system for an additional 25% of the gathering fee and an additional 100% of the compression fee applicable to services provided to EQT on its Windridge system.
On November 25, 2015, Rice Poseidon Midstream LLC, which became an indirect wholly-owned subsidiary of EQM as a result of the EQM-RMP Merger, executed a fixed price per unit gas gathering agreement with a subsidiary of Rice Energy (which was acquired by EQT as a result of the Rice Merger) (the ASR Gathering Agreement). Pursuant to the agreement, EQM gathersgathered and compressescompressed natural gas on its Whipkey gathering system and connectsconnected its gathering system with the ASR gathering system. The primary term of this agreement expireswould have expired in November 2025, with yearly evergreen renewal terms thereafter.2025. EQM receivesreceived fixed gathering and compression fees per dekatherm. Additionally, it receivesreceived an interconnect fee on a monthly basis per dekatherm received at each applicable receipt point. All fees arewere subject to an annual adjustment based on the Consumer Price Index. This agreement covers approximately 2,200 gross acres of EQT's gross acreage position in Greene County, Pennsylvania. Under this agreement, EQT dedicates all gas from the subject acreage to the Whipkey gathering system.
On September 14, 2017, Rice Poseidon Midstream LLC which became an indirect wholly-owned subsidiary of EQM as a result of the EQM-RMP Merger, executed a gas gathering agreement with two subsidiaries of EQT.EQT (the State Gamelands Gathering Agreement). Pursuant to the agreement, EQM providesprovided gathering services for EQT's State Gamelands 179 Well Pad in Greene County, Pennsylvania. The initial term of the agreement expireswould have expired in September 2032 (with year-to-year rollovers). EQT initially subscribed for total guaranteed capacity of approximately 200 MMcf per day, with additional volumes delivered on an interruptible basis. Beginning on January 1, 2020, and continuing each year thereafter, EQT and EQM will adjust the total guaranteed capacity for the following year to account for new dedicated gas to be brought online and taking into account the average volume of gas delivered in excess of total guaranteed capacity during the six months prior to the adjustment. Also, underUnder the agreement, EQT hashad dedicated all gas from the Marcellus formation or above that is produced from wells located in the State Gamelands 179 Well Pad. EQT may also dedicate new gas under the agreement upon notice to EQM which would result in an upward adjustment to total guaranteed capacity after January 1, 2020, as described above. EQM providesprovided both gathering and compression services, with separate fixed fees charged per dekatherm of gas gathered and compressed.
NWV Gathering Contribution Agreement and Preferred Interest. On March 10, 2015, EQM entered into a Contribution and Sale Agreement pursuant to which, on March 17, 2015, EQT contributed the Northern West Virginia MarcellusNWV Gathering System (NWV Gathering) to EQM Gathering (NWV Gathering Acquisition).Opco. The Contribution and Sale Agreement also contemplated the sale to EQM of a preferred interest in EQT Energy Supply, LLC (EES), which at the time was an indirect wholly owned subsidiary of EQT. EES generates revenue from services provided to a local distribution company. This sale was completed on April 15, 2015. The consideration paid by EQM to EQT in connection with the acquisition of the preferred interest in EES was approximately $124.3 million. During the year ended December 31, 2018, EQM2020, the Company received $11.0$11.1 million of distributions from EES in respect of its preferred interest.
Eureka Gas Gathering Agreement. EQT (as assignee of Stone Energy Company) is party to a gas gathering agreement with Eureka Midstream, LLC (as successor-in-interest to Eureka Hunter Pipeline, LLC) (Eureka), a wholly owned subsidiary of Eureka Midstream Holdings, LLC (in which the Company owns a 60% ownership interest), dated February 17, 2012, for gathering services subject to two separate Individual Transaction Confirmations (each an ITC). Under ITC No. EHP-Stone-005, Eureka provides gathering services on the Lewis Wetzel Low Pressure Gas Gathering System and produced liquids gathering for an 8-year term (with year-to-year rollovers). Under the agreement, Eureka gathers EQT's gas from the Mills Wetzel production area and delivers gas to a central production facility (Carbide Facility) for compression, dehydration, metering and delivery to the MarkWest Mobley Gas Processing Plant. Eureka is also responsible for separation of produced liquids at the Carbide Facility. Under ITC No. EHP-Stone-004, Eureka provides interruptible gathering services on its TCP Residue Lateral line, by accepting residue gas at the MarkWest Mobley Gas Processing Plant and delivering the same to the Smithfield — Mobley TCO meter. The term of such service is month to month.
Transportation Service and Precedent Agreements. EQT Energy has contracted with Equitrans, L.P., an indirect wholly owned subsidiary of EQM, for firm transmission capacity with a primary term through October of 2024. The reserved capacity under this contract was 1,076 BBtu per day through August 1, 2016, is 1,035 BBtu through July 1, 2023 and will decrease as follows thereafter: 630 BBtu on July 1, 2023, 325 BBtu on September 1, 2023 and 30 BBtu on October 1, 2024. EQT Energy's firm transportation agreement will automatically renew for one year periods upon the expiration of the primary term, subject to six months prior written notice by either party to terminate. In addition, during 2017, EQT Energy assumed a contract for 20 BBtu per day of firm transmission capacity with a primary term through June 30, 2024 which will automatically renew for one year periods upon the expiration of the primary term, subject to six months prior written notice by either party to terminate. On November 13, 2017, EQT acquired a contract for 105 BBtu per day of firm transmission capacity with a primary term through October 31, 2018, which automatically renewed on November 1, 2018, November 1, 2019, and November 1, 2020, and will continue to automatically renew for one year periods upon the expiration of the then currentthen-current term, subject to six months prior written notice by either party to terminate. EQMEquitrans, L.P. has also entered into agreements with EQT Energy to provide (i) interruptible transmission service, which is currently renewing automatically for one year periods, subject to six months prior written notice by either party to terminate; and (ii) interruptible wheeling service, which is currently renewing automatically for one year periods, subject to one month prior written notice by either party to terminate.terminate; and (iii) loan and parking service, effective March 1, 2020 through June 30, 2022.
In January 2016, EQT Energy entered into a firm transportation agreement for 650 BBtu per day of firm transmission capacity on EQM'sthe Company's Ohio Valley Connector pipeline. The firm transmission capacity became available when the pipeline began service on October 1, 2016. This agreement has a primary term through September 30, 2036.
EQT Energy is also party to a precedent agreement and service agreement with Equitrans, L.P. for 300 BBtu per day of firm transmission capacity for a 20-year term utilizing proposed capacity that will bewas created by EQM's proposedthe Company's Equitrans, L.P. Expansion project.project (EEP). The firm transmissionreservation charges and EQT Energy's associated capacity commitment for EEP will become available upon completioncommence once MVP is placed in service. A portion of the project, which EQM is targetingEEP commenced operations with interruptible service in the fourththird quarter of 2019.
In connection with the Marianna Gas Gathering Agreement, on August 7, 2017, EQT Energy entered into a two-year (with month-to-month rollovers) transportation service agreement with Equitrans, under which EQT Energy pays a fixed fee per dekatherm of natural gas transported under the agreement. The transmission agreement was effective on September 1, 2017.
In connection with the River Pad Gas Gathering Agreement, on July 25, 2017, EQT Energy entered into a 10-year (with year-to-year rollovers) transportation service agreement with Equitrans for approximately 30 MMcf per day of firm transportation capacity. The firm transmission capacity will becomebecame available upon completion of the River Pad project, which was completed in the second quarter of 2018.
Storage Agreements. EQMThe Company is not currently a party to any firm storage agreements with EQT. EQMThe Company does, however, provide balancing, lending and parking services to EQT pursuant to Rate Schedule LPS.
EQM Water Services Agreements. On June 18, 2018, EQM executed a water services agreement with EQT whereby EQM agreed to provide, on an interruptible basis, fresh water for use in connection with well drilling, hydro-fracturing and extraction operations at EQT's Carpenter well pad located in Greene County, Pennsylvania. The agreement has an initial term of five years, beginning on the in-service date of the water system, which occurred on July 17, 2018, and may be extended by the written agreement of the parties thereafter. Under the agreement, EQM receives a fixed fee for freshwater deliveries by pipeline directly to the Carpenter well pad. EQM and EQT entered into an Amended and Restated Water Services Agreement for the Carpenter well pad effective December 3, 2018 (Amended Carpenter Agreement). Pursuant to the Amended Carpenter Agreement, EQM will provideprovides fresh water from its Washington and Greene County and Southwestern Pennsylvania Water Authority (SPWA) systems to the Carpenter well pad at a fixed rate paid by EQT. EQM's service will beis provided on an interruptible basis, although EQT has committed to exclusively use EQM's water for the Carpenter well pad up to the required daily volume (on days EQT withdraws water). The Amended Carpenter Agreement contemplates a targethad an in-service date of June 1, 2019, has an initial term of five years from the effective date and may be extended by written agreement of the parties thereafter.
Effective July 13, 2018, EQM executed a water services agreement with EQT whereby EQM agreed to provide, on an interruptible basis, fresh water for use in connection with hydraulic fracturing and drilling operations and other related operations in EQT's Claysville (Pisces) development area, subject to a minimum annual volume commitment. Under the agreement, EQM agreed to construct and operate a fresh water system connecting the SPWA's water system to each well within the Claysville (Pisces) development area for the delivery of fresh water under the water services agreement. EQM and EQT entered into a First Amendment to the Water Services Agreement for the Claysville (Pisces) development area effective January 1, 2020 (First Claysville Amendment). The agreement has an initial term of ten years fromFirst Claysville Amendment redefines the contract start date and contract year to correspond with the in-service date of the Claysville fresh water system, whichsystem. The First Claysville Amendment provided EQT a full calendar year to reach an established annual minimum volume commitment. The term of agreement is expected to occur inten years from the second quartercontract start date of 2019,January 1, 2020 and will continue from year to year thereafter. Under the agreement, EQM will receive, in addition to certain other fees, (i) fixed fees per gallon based upon the volume of fresh water deliveries over the term of the agreement, subject to annual consumer price index adjustments, (ii) fees assessed by SPWA or another third party to source fresh water for delivery through the fresh water system; and (iii) reimbursement for all operational costs and fees to provide water to EQT.
In December 2018, Equitrans Water Services (PA), LLCEQM executed three (3) additional water services agreements with EQT Production CompanyEPC to design, construct, operate and maintain fresh water systems for the purpose of providing fresh water services to support EQT's well drilling, hydraulic fracturing and extraction work at several of its operations at various locations in Washington and Greene Counties, Pennsylvania:
EQM Gathering Opco LLC and EQT also entered into a letter agreement dated December 3, 2018 memorializing EQM's commitment in furtherance of existing water services agreements between Equitrans Water Services (OH) LLC and Equitrans Water Services (PA) LLCsubsidiaries of EQM and EQT to provide and transfer fresh water from EQM ownedEQM-owned and operated impoundments in Ohio and Pennsylvania to EQT operations (Impoundment Agreement). Pursuant to the Impoundment Agreement, EQM will provideprovides this service on an interruptible basis and EQM has the sole right to agree to, limit or reject EQT service requests. EQT is responsible for all costs incurred to provide this service and will paypays EQM a fixed rate for supplied water. EQT shallis obligated to provide as much notice as reasonably possible prior to required in-service dates, and the Impoundment Agreement will remain effective until the parties mutually agree to terminate it.
EQM has also entered into certain immaterial produced water services agreements with EQT.
Legacy RMP Water Services Agreements. As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under a Second Amended and Restated Water Services Agreement executed on June 13, 2017 with EQT, pursuant to which EQM provides certain freshwater services to EQT for various delivery points in Washington and Greene Counties, Pennsylvania. The term of the agreement expires on October 15, 2020. Under the agreement, EQM receives fees per gallon based upon the relevant delivery point.
As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under water services agreements executed on November 4, 2015 with Rice Energy (which was acquired by EQT as a result of the Rice Merger), pursuant to which EQM provides certain fluid handling services to EQT, including the exclusive right to provide fresh water for well completions operations in the Marcellus and Utica Shales and to collect and recycle or dispose of flowback and produced water within areas of dedication in defined service areas in Pennsylvania and Ohio.Ohio (the RMP Water Services Agreements). The initial term of the RMP Water Services Agreements expires in December 2029 and continues from month to month thereafter. Under the agreements, EQM will receivereceives (i) a variable fee, based on volumes of water supplied, for freshwater deliveries by pipeline directly to the well site, subject to annual consumer price index adjustments, and (ii) a produced water hauling fee of actual out-of-pocket cost incurred by it, plus a 2% margin.
Water Services Letter Agreement. On February 26, 2020, the Company entered into a letter agreement with EQT, pursuant to which EQT agreed to utilize the Company for the provision of water services in Pennsylvania under existing water services agreements and new water services agreements if negotiated between the parties (such letter agreement, the Water Services Letter Agreement). The Water Services Letter Agreement is effective as of the first day of the first month following the MVP full in-service date and shall expire on the fifth anniversary of such date. During each year of the Water Services Letter Agreement, EQT agreed that fixed MVC fees payable to the Company for water services incurred on a volumetric basis, provided in accordance with existing agreements and new agreements entered into between the parties pursuant to the Water Services Letter Agreement (or the related agreements), shall be equal to or greater than $60 million per year in Pennsylvania.
Other Agreements with EQT |
Rice Water Services Acquisition. As a result of the EQM-RMP Merger, EQM acquired RMP's interest in Rice Water Services (PA) LLC and Rice Water Services (OH) LLCcertain subsidiaries of RMP (the Rice Water Entities) and, until December 31, 2025, (i) the exclusive right to develop water treatment facilities in the areas of dedication defined in the RMP Water Services Agreements (as further discussed below) and (ii) an option to purchase any water treatment facilities acquired by certain subsidiaries of EQT in such areas at the acquisition cost (collectively, the Option). RMP executed a Purchase and Sale Agreement with Rice Energy on November 4, 2015, pursuant to which RMP acquired from Rice Energy all of the outstanding limited liability company interests of the Rice Water Entities (the Rice Water Services Acquisition). The acquired business included Rice Energy's Pennsylvania and Ohio fresh water distribution systems and related facilities that provided access to 43.459.0 MMgal per day of fresh water from the Monongahela River, the Ohio River and other regional water sources in Pennsylvania and Ohio as of December 31, 2018. In connection with the Rice Water Services Acquisition, Rice Energy also granted RMP the Option. The closing of the Rice Water Services Acquisition occurred on November 4, 2015. The aggregate consideration paid by RMP
EQT Corporation Guaranty. EQT has guaranteed the payment obligations of certain of its subsidiaries, up to Rice Energya maximum amount of $115 million, $50 million and $30 million related to gathering, transmission and water services, respectively, across all applicable contracts, for the benefit of the subsidiaries of EQM providing such services. In January 2020, EQT's guaranty in relation to its transmission contracts with EQM increased to $131 million.
Credit Letter Agreement. On February 26, 2020, in connection with the acquisitionexecution of the Rice Water EntitiesEQT Global GGA, the Company and EQT entered into a letter agreement (the Credit Letter Agreement) pursuant to which, among other things, (a) the receiptCompany relieved certain credit posting requirements for EQT, in an amount up to approximately $250 million, under certain commercial agreements with the Company, subject to EQT maintaining a minimum credit rating from two of three rating agencies of (i) Ba3 with Moody's Investors Service, (ii) BB– with S&P Global Ratings and (iii) BB– with Fitch Investor Services and (b) the Option was $200 millionCompany agreed to use commercially reasonable good faith efforts to negotiate similar credit support arrangements for EQT in cash, which was funded with borrowings under RMP's revolving credit facility.respect of its commitments to Mountain Valley Pipeline, LLC.
EQT Corporation Guaranty.Share Purchase Agreements. On February 26, 2020, the Company entered into two share purchase agreements (the Share Purchase Agreements) with EQT, has guaranteed all payment obligations, plus interest and any other charges, due and payable by EQT Energy to Equitrans pursuant to which the agreements discussed above, upCompany agreed to $50 million. This guaranty will terminate on November 30, 2023 unless terminated earlier by(i) purchase 4,769,496 shares of Equitrans Midstream common stock (the Cash Shares) from EQT by providing 10 days written notice.in exchange for approximately $46 million in cash, (ii) purchase 20,530,256 shares of Equitrans Midstream common stock (the Rate Relief Shares and, together with the Cash Shares, the Share Purchases) from EQT in exchange for a promissory note in the aggregate principal amount of approximately $196 million (which EQT subsequently assigned to EQM as consideration for certain commercial terms under the EQT Global GGA), and (iii) pay EQT cash in the amount of approximately $7 million (the Cash Amount). On March 5, 2020, the Company completed the Share Purchases and paid the Cash Amount.
Transmission Acreage Dedication. Pursuant to an acreage dedication to EQM by EQT, EQM has the right to elect to transport, at a negotiated rate, which will be the higher of a market or cost of service rate, all natural gas produced from wells drilled by EQT on the dedicated acreage, which is an area covering approximately 60,000 acres surrounding EQM's storage assets in Allegheny, Washington and Greene counties in Pennsylvania and Wetzel, Marion, Taylor, Tyler, Doddridge, Harrison and Lewis counties in West Virginia. The acreage dedication is contained in a sublease agreement in which EQM granted to EQT all of the oil and gas interests, including the exclusive rights to drill, explore for, produce and market such oil and gas, EQM had received as part of certain of its oil and gas leasehold estates EQM uses for gas storage and protection. Furthermore, if EQT acquires acreage with natural gas storage rights within the area of mutual interest established by the acreage dedication, then EQT will enter into an agreement with EQM to permit it to store natural gas on such acreage. Likewise, if EQM acquires acreage within the area of mutual interest with natural gas or oil production, development, marketing and exploration rights, such acreage will automatically become subject to EQT's rights under the acreage dedication.
Pipeline, Construction, Ownership and Operating Agreement. A subsidiary of EQM is party to a Pipeline, Construction, Ownership and Operating Agreement (the Whipkey Agreement) pursuant to which it ownsowned a 60% working interest in a joint venture that owns a natural gas gathering pipeline in Greene County, Pennsylvania. The gathering pipeline owned by the joint venture is connected to seven producing wells operated by EQT. The Whipkey Agreement was contributed to RMP, which was acquired by EQM as a result of the EQM-RMP Merger, discussed below, in connection with the closing of RMP's initial public offering. RMP, prior to the EQM-RMP Merger, and EQM, following the EQM-RMP Merger, recognized approximately $1.8 million of revenue, during the year ended December 31, 2018 pursuant to the Whipkey Agreement.
EQM-RMP Merger. On April 25, 2018, EQM entered into an Agreement and Plan of Merger (the Merger Agreement) with RMP, RMP's general partner, EQM's former general partner, EQM Acquisition Sub, LLC, a wholly owned subsidiary of EQM (Merger Sub), EQM GP Acquisition Sub, LLC, a wholly owned subsidiary of EQM (GP Merger Sub), and, solely for certain limited purposes set forth therein, EQT. Pursuant to the Merger Agreement, on July 23, 2018, Merger Sub and GP Merger Sub merged with and into RMP and the RMP's general partner, respectively, with RMP and RMP's general partner surviving as wholly owned subsidiaries of EQM (the EQM-RMP Merger). Pursuant to the Merger Agreement, each RMP common unit issued and outstanding immediately prior to the effective time of the EQM-RMP Merger was converted into the right to receive 0.3319 EQM common units (the Merger Consideration), the issued and outstanding Incentive Distribution Rights of RMP were canceled and each outstanding award of phantom units in respect of RMP common units fully vested and converted into the right to receive the Merger Consideration, less applicable tax withholding, in respect of each RMP common unit subject thereto. The aggregate Merger Consideration consisted of approximately 34 million EQM common units, of which 9,544,530 EQM common units were received by an indirect wholly owned subsidiary of EQT and were transferred to the Company in connection with the Separation.
2018 Drop-Down Transaction. On April 25, 2018, EQM executed a Contribution and Sale Agreement (the Contribution Agreement) with EQT, Rice Midstream Holdings LLC, a wholly owned subsidiary of EQT, and EQM Gathering Holdings, LLC (EQM Gathering), a wholly owned subsidiary of EQM, pursuant to which EQM Gathering acquired from EQT all of the outstanding limited liability company interests in each of (i) EQM Olympus Midstream LLC (EQM Olympus), (ii) Strike Force Midstream Holdings LLC and (iii) EQM West Virginia Midstream LLC in exchange for an aggregate of 5,889,282 EQM common units and aggregate cash consideration of $1.15 billion, subject to customary purchase price adjustments (the 2018 Drop-Down Transaction). The parties to the Contribution Agreement completed the 2018 Drop-Down Transaction on May 22, 2018, with an effective date of May 1, 2018. As a result of the 2018 Drop-Down Transaction and a separate transaction with an affiliate of Gulfport Energy Corporation, EQM currently owns 100% of Strike Force Midstream LLC.
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As of December 31, 2018, prior to the closing of the Simplification Transactions, EQGP owned 21,811,643 EQM common units, representing an approximate 17.9% limited partner interest, 1,443,015 EQM general partner units, representing an approximate 1.2% general partner interest, and all of the Incentive Distribution Rights in EQM, which at the time entitled EQGP to receive 48.0% of all incremental cash distributions in a quarter after $0.5250 had been distributed to each EQM common and general partner unitholder in that quarter. In addition, as of December 31, 2018, ETRN owned 15,433,812 EQM common units, representing an approximate 12.7% limited partner interest in EQM. Following the closing of the Simplification Transactions, the Company owns 117,245,455 EQM common units and 7,000,000 Class B Units.
EQM's operations and activities are managed by the general partner of EQM through its officers and directors. During 2018 following the Separation, Messrs. Karam, Oliver, and Swisher and Ms. Charletta served as executive officers of both ETRN and the general partner of EQM. In addition, Messrs. Karam and Porges served as directors of both ETRN and the general partner of EQM at that time.
On November 13, 2018 in connection with the Separation, the Company entered into an Omnibus Agreement and a Secondment Agreement with EQM and the general partner of EQM to replace similar agreements that these subsidiaries had in place with EQT prior to the Separation (as discussed above). These agreements relate primarily to selling, general and administrative expenses incurred by the Company for the benefit of EQM and the secondment of the Company's employees to EQM. The Company incurred expenses of $16.3 million during 2018 for which EQM was obligated to reimburse Equitrans Midstream under these agreements.
APPENDIX B |
Non-GAAP Financial Information |
Company EBITDA and Adjusted |
As used in this proxy statement, adjusted midstreamCompany EBITDA means Equitrans Midstream Corporation's (the Company) net income, (i) plus the Company's income tax expense, net interest expense, loss on early extinguishment of debt, depreciation, amortization of intangible assets, impairmentimpairments of goodwill,long-lived assets, transaction costs and credit loss expense associated with a customer bankruptcy, (ii) less the Company's equity income and other income, and (iii) less the earnings before interest, taxes, depreciation and amortization (EBITDA) of any business or assets acquired during the period, as set forth in the Company's Amended and Restated Short-Term Incentive Plan for the 2020 plan year (the STIP). As used in this proxy statement, adjusted EBITDA means the Company's net income, (i) plus the Company's income tax expense, net interest expense, loss on early extinguishment of debt, depreciation, amortization of intangible assets, impairments of long-lived assets, payments on the preferred interest in EQT Energy Supply, LLC (Preferred Interest), non-cash long-term compensation expense (income) and transaction costs, (ii) less the Company's equity income, AFUDC-equity, unrealized gain (loss) on derivative instruments and adjusted midstream EBITDA of assets priorattributable to acquisition. Adjusted midstreamnoncontrolling interest. Company EBITDA is aand adjusted EBITDA are non-GAAP supplemental financial measuremeasures that management and external users of EQM'sthe Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess:
EQMThe Company believes that Company EBITDA and adjusted midstream EBITDA providesprovide useful information to investors in assessing EQM'sthe Company's results of operations and financial condition. Adjusted midstreamCompany EBITDA and adjusted EBITDA should not be considered as an alternativealternatives to the Company's net income, operating income or any other measure of financial performance presented in accordance with GAAP. Adjusted midstreamCompany EBITDA hasand adjusted EBITDA have important limitations as analytical tools because it excludesthey exclude some, but not all, items that affect net income. Additionally, because Company EBITDA and adjusted midstream EBITDA may be defined differently by other companies in itsthe Company's industry, EQM's definitionthe Company's definitions of Company EBITDA and adjusted midstream EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measures. The tabletables below reconcilesreconcile Company EBITDA and adjusted midstream EBITDA with net income as derived from the statements of consolidated operationscomprehensive income included in EQM'sthe Company's annual report on Form 10-K for the year ended December 31, 2018.2020.
Adjusted MidstreamCompany EBITDA
($ in thousands)
| Year Ended December 31, 2018 | | | Year Ended December 31, 2020 | | |||||||||
Net income | $ | 638,044 | ||||||||||||
| | | | | | | ||||||||
| Add: | | | | ||||||||||
| | | | | | | | |||||||
Income tax expense | 105,331 | |||||||||||||
| | | | | | | | |||||||
| Net interest expense | | 307,380 | | ||||||||||
| | | | | | | | |||||||
Net income | $ | 671,348 | Loss on early extinguishment of debt | 24,864 | ||||||||||
| | | | | | | | | | | | |||
| Add: | | | | Depreciation | | 259,613 | | ||||||
| | | | | | | | | | | | | | |
Net interest expense | 122,094 | Amortization of intangible assets | 63,195 | |||||||||||
| | | | | | | | | | | | | | |
| Depreciation | | 171,914 | | Impairments of long-lived assets | | 55,581 | | ||||||
| | | | | | | | | | | | | | |
Amortization of intangible assets | 41,547 | Transaction costs | 23,797 | |||||||||||
| | | | | | | | | | | | | ||
| Impairment of goodwill | | 261,941 | | Credit loss expense associated with customer bankruptcy | | 1,734 | | ||||||
| | | | | | | | | | | | | | |
Transaction costs | 7,761 | Less: | ||||||||||||
| | | | | | | | | | | | | ||
| Less: | | | | Equity income | | (233,833 | ) | | |||||
| | | | | | | | | | | | | | |
Adjusted Midstream EBITDA attributable to the Drop-Down Transaction * | (44,090 | ) | Other income | (17,225 | ) | |||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | | | ||
| Adjusted Midstream EBITDA | $ | 1,232,515 | | Company EBITDA | $ | 1,228,481 | | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Adjusted EBITDA
($ in thousands)
| Year Ended December 31, 2020 | | |||||
Net income | $ | 638,044 | |||||
| | | | | | | |
| Add: | | | | |||
| | | | | | | |
Income tax expense | 105,331 | ||||||
| | | | | | | |
| Net interest expense | | 307,380 | | |||
| | | | | | | |
Loss on early extinguishment of debt | 24,864 | ||||||
| | | | | | | |
| Depreciation | | 259,613 | | |||
| | | | | | | |
Amortization of intangible assets | 63,195 | ||||||
| | | | | | | |
| Impairments of long-lived assets | | 55,581 | | |||
| | | | | | | |
Preferred Interest payments | 11,057 | ||||||
| | | | | | | |
| Non-cash long-term compensation expense | | 12,301 | | |||
| | | | | | | |
Transaction costs | 23,797 | ||||||
| | | | | | | |
| Less: | | | | |||
| | | | | | | |
Equity income | (233,833 | ) | |||||
| | | | | | | |
| AFUDC — equity | | (818 | ) | | ||
| | | | | | | |
Unrealized gain on derivative instruments | (16,460 | ) | |||||
| | | | | | | |
| Adjusted EBITDA attributable to noncontrolling interest(1) | | (35,424 | ) | | ||
| | | | | | | |
| | | | | | | |
Adjusted EBITDA | $ | 1,214,628 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
APPENDIX C |
Proposed Amendments to Amended and Restated Articles of Incorporation of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements |
The full text of the proposed amendments to Division B and Division C of the Articles to remove the 80% supermajority voting requirements for shareholders to approve amendments to the Articles and the Bylaws and to remove directors from office outside of the annual meeting process is as follows (proposed additions are double underlined, and proposed deletions are stricken through):
Proposed Amendments to Division B of the Articles: |
2.3 Amendments to Bylaws. The Board of Directors may make, amend and repeal the Bylaws with respect to those matters which are not, by statute, reserved exclusively to the shareholders, subject always to the power of the shareholders to change such action as provided herein.No Bylaw may be made, amended or repealed by the shareholders unless such action is approved by the affirmative vote of the holders of not less than $0.1 million.80% of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Articles or the Bylaws) the vote specified by applicable law for valid shareholder action shall be required.
2.4 Amendments to Articles. Subject to the voting rights given to any particular series of the Preferred Stock by the Board of Directors pursuant to Subdivision 1.1, and except as may be specifically provided to the contrary in any other provision in the Articles with respect to amendment or repeal of such provision, the affirmative vote of the holders of not less than 80% of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, shall be required to amend the Articles of the Company or repeal any provision thereof, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Articles) such shareholder approval as may be specified by law shall be required.
2.42.5General. The Company may issue and dispose of any of its authorized shares for such consideration as may be fixed by the Board of Directors subject to the laws then applicable.
Amendments to Division C of the Articles: |
3.1 The business and affairs of the Company shall be managed by a Board of Directors comprised as follows:
(a) The number of persons comprising the Board of Directors shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority vote of the directors then in office.
(b) Each person elected as a director of the Company, whether to succeed a person whose term of office as a director has expired (including the expiration of such person's term) or to fill any vacancy, shall be elected for a term expiring at the next annual meeting. Notwithstanding the foregoing, each director elected shall hold office until such director's successor shall have been duly elected and qualified or until such director's earlier death, resignation or removal.
(c) Any director or the entire Board of Directors may be removed from office by shareholder vote at any time, without assigning any cause,but only if shareholders entitled to cast at least 80%by the affirmative vote of a majority of the voteswhichcast by all shareholderswould be entitled tocastvote at an annual election of directorsshall vote in favor of such removal.
(d) Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of directors, shall be filled only by a majority vote of the remaining directors then in office, though less than a quorum, except that vacancies resulting from removal from office by a vote of the shareholders may be filled by the shareholders at the same meeting at which such removal occurs. A person elected to fill a vacancy in the Board of Directors shall hold office for a term expiring at the next annual meeting of shareholders held
immediately following such person being elected to fill the vacancy. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
(e) Whenever the holders of any class or series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the Company, none of the foregoing provisions of this Subdivision 3.1 shall apply with respect to the director or directors elected by such holders of Preferred Stock.
3.2 Notwithstanding any other provisions of law, the Articles or the Bylaws of the Company, the affirmative vote of the holders of not less than 80% of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with, this Division C, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors.
3.23.3 No director shall be personally liable for monetary damages as such (except to the extent otherwise provided by law) for any action taken, or any failure to take any action, unless such director has breached or failed to perform the duties of his or her office under Title 15, Chapter 17, Subchapter B of the Pennsylvania Consolidated Statutes (or any successor statute relating to directors' standard of care and justifiable reliance), and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.
If the Pennsylvania Consolidated Statutes are amended after November 9, 2018, the date this Subdivision received shareholder approval, to further eliminate or limit the personal liability of directors, then a director shall not be liable, in addition to the circumstances set forth in this Subdivision, to the fullest extent permitted by the Pennsylvania Consolidated Statutes, as so amended.
APPENDIX D |
Proposed Amendment to Second Amended and Restated Bylaws of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements |
The full text of the proposed amendments to Section 9.01 of the Bylaws to remove the 80% supermajority voting requirements for shareholders to approve amendments to the Bylaws is as follows (proposed deletions are stricken through):
Proposed Amendments to Section 9.01 of the Bylaws |
Section 9.01 (a) The Board of Directors may make, amend and repeal the Bylaws with respect to those matters which are not, by statute, reserved exclusively to the shareholders, subject always to the power of the shareholders to change such action as provided herein.No Bylaw may be made, amended or repealed by the shareholder sunless such action is approved by the affirmative vote of the holders of not less than eighty percent (80%) of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Restated Articles or the Bylaws) the vote specified by applicable law for valid shareholder action shall be required.
(b) Unless otherwise provided by a Bylaw, by the Restated Articles or by law, any Bylaw may be amended, altered or repealed, and new Bylaws may be adopted, by vote of a majority of the directors present at any regular or special meeting duly convened, but only if notice of the specific Sections to be amended, altered, repealed or added is included in the notice of meeting. No provision of the Bylaws shall vest any property or contract right in any shareholder.
ANNUAL MEETING OF SHAREHOLDERS OF EQUITRANS MIDSTREAM June 11, 2019 CORPORATIONVOTE BY INTERNET Before The Meeting - Access “www.voteproxy.com”Go to www.proxyvote.com Use the Internet to transmit your voting instructions and followfor electronic delivery of information up until 11:59 p.m. Eastern Time the on-screen instruc-tionsday before the cut-off date or scan the QR code with your smartphone.meeting date. Have your proxy card availablein hand when you access the web page. TELEPHONEsite and follow the instructions to obtain your records and to create an electronic voting instruction form. EQUITRANS MIDSTREAM CORPORATION ATTN: CORPORATE SECRETARY 2200 ENERGY DRIVE CANONSBURG, PA 15317 During The Meeting - Call toll-free 1-800-PROXIES (1-800-776-9437)Go to www.virtualshareholdermeeting.com/ETRN2021 You may participate in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephonemeeting via the Internet and vote electronically during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card availablein hand when you call. Vote online/phone until 11:59 PM ESTcall and then follow the day before the meeting.instructions. VOTE BY MAIL - Sign,Mark, sign and date and mail your proxy card and return it in the postage-paid envelope we have provided as soon as possible. IN PERSON - Except for Shares held in the Company’s Long-Term Incentive Plan (LTIP) or the Equitrans Midstream Corporation Employee Savings Plan (401(k) Plan), you may vote your shares in person by attending the Annual Meeting. Please see the proxy statement for annual meeting attendance requirements. GO GREEN - e-Consent makesreturn it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. 20730403000000001000 0 061119 2. To approve, on an advisory basis, the compensation of the O Vicky A. Bailey FOR ALL NOMINEES 3. To approve, on an advisory basis, the frequency of future 4. To ratify the appointment of Ernst & Young LLP as the Company’s changes to the registered name(s) on the account may not be submitted via Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. THE BOARD OF DIRECTORS RECOMMENDS AVote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, "FOR" ALL NOMINEES LISTED, "FOR" PROPOSALS 2 AND 4, AND FOR “1 YEAR” ON PROPOSAL 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTEBLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN HERE xFOLLOWS: D32276-P48942-Z79019 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EQUITRANS MIDSTREAM CORPORATION The Board of Directors recommends you vote FOR the following proposals: 1. To elect seven (7)nine (9) directors to the Board of Directors of the Company to serve until the next annual meeting of shareholders. NOMINEES: O Kenneth M. Burke WITHHOLD AUTHORITYO Margaret K. Dorman FOR ALL NOMINEESO Thomas F. Karam O David L. Porges FOR ALL EXCEPTO Norman J. Szydlowski (See instructions below)O Robert F. Vagt INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill inNominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Vicky A. Bailey For Against Abstain 2. Approval, on an advisory basis, of the circle next to each nominee you wish to withhold, as shown here: FOR AGAINST ABSTAIN Company’scompensation of the Company's named executive officers for 2018. 1 year 2 years 3 years ABSTAIN advisory votes on executive compensation. FOR AGAINST ABSTAIN2020 (Say-on-Pay). Approval of Amendments to the Company's Articles of Incorporation and Bylaws to remove the supermajority voting requirements. ! ! ! ! ! ! 1b. Sarah M. Barpoulis 3. 1c. Kenneth M. Burke 1d. Patricia K. Collawn 4. Ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2019. 5.2021. To transact any other business as may properly be presented at the Annual Meeting or any adjourmentadjournment or postponement thereof. These items! ! ! 1e. Margaret K. Dorman 1f. Thomas F. Karam 5. 1g. D. Mark Leland 1h. Norman J. Szydlowski 1i. Robert F. Vagt Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of business are more fully described in the proxy statement. The record dateProxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D32277-P48942-Z79019 EQUITRANS MIDSTREAM CORPORATION Proxy for Annual Meeting isof Shareholders to be held April 12, 2019. Only shareholders27, 2021 Solicited on Behalf of recordthe Board of Directors The undersigned hereby appoints Tobin M. Nelson and Nathaniel D. DeRose, and each of them, with full power of substitution and power to act alone, as proxies to vote all the shares of Equitrans Midstream Corporation Common Stock and/or Series A Perpetual Convertible Preferred Stock which the undersigned would be entitled to vote if electronically present and acting at the closeAnnual Meeting of business on that date may voteShareholders of EQUITRANS MIDSTREAM CORPORATION, to be held April 27, 2021 at the meeting9:00 a.m. Eastern Time, via live webcast at www.virtualshareholdermeeting.com/ETRN2021, and at any adjournments or any adjournmentspostponements thereof. In their discretion, the proxies are authorized, in accordance with their best judgement,judgment, to vote upon such other business as may properly come before the Annual Meeting or any adjourmentsadjournments thereof. This proxy when properly executed will be voted as directed herein by the undersigned shareholder. A vote FOR the election of nominees herein includes discretionary authority to vote for a substitute nominee if any nominee becomes unavailable for election for any reason. Please see the proxy statement for informa-tion on how your shares will be voted ifIf no direction is made.made, the proxies will vote in accordance with the Board of Directors' recommendations on all matters listed on this proxy card. If you hold shares in the LTIPEquitrans Midstream Corporation 2018 Long-Term Incentive Plan, as amended (LTIP), or the 401(k)Equitrans Midstream Corporation Employee Savings Plan (401(k) Plan), your vote must be received by 11:59 P.M. Eastern Time on June 2, 2019. MARK“X” HERE IF YOU PLAN TO ATTEND THE MEETING. To changeApril 19, 2021. This card also serves as voting instructions to the address onapplicable Trustee and administrator of the 401(k) Plan or LTIP, respectively. This card, when properly executed, directs the Trustee or administrator, as applicable, to vote the Equitrans Midstream Corporation shares related to your account, please check the box401(k) Plan shares or restricted shares, as applicable, at right and indicate your new address in the address space above. Please note that this method. Signature of Shareholder Date: Signature of ShareholderDate: NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at - http://www.astproxyportal.com/ast/22476/ COMPANY NUMBER ACCOUNT NUMBER PROXY VOTING INSTRUCTIONS
- 0 EQUITRANS MIDSTREAM CORPORATION Proxy forsuch Annual Meeting as indicated on the reverse side. If this card is returned signed with no direction given or not returned at all, your 401(k) Plan shares will be voted by the Trustee of Shareholdersthe 401(k) Plan in proportion to be held June 11, 2019 Solicited on Behalfhow other participants vote their shares. If this card is returned signed with no direction given, the administrator of the LTIP will vote your restricted shares as recommended by the Board of Directors The undersigned hereby appoints Tobin M. Nelson and Nathaniel D. DeRose, and each of them, with full powerthe Company. If you do not return this card, the administrator of substitution and power to act alone, as proxies (and with respect to the LTIP will not vote your restricted shares. All voting instructions will be kept confidential. You may not vote your 401(k) Plan instructs the Trustee and with respect to the LTIP instructs the Plan Administrator to instruct the proxies) to vote all the shares of Equitrans Midstream Corporation Common Stock which the undersigned would be entitled to vote if personally present and actingor restricted shares at the Annual Meeting of Shareholders of EQUITRANS MIDSTREAM CORPORATION,Meeting. The Trustee or the administrator, as applicable, must receive your proxy instructions no later than 11:59 p.m. Eastern Time on April 19, 2021 to be held June 11, 2019 at 9:00 a.m. Eastern Time, atcounted in the law offices of McGuireWoods LLP, Tower Two-Sixty, 260 Forbes Avenue, Suite 1800, Pittsburgh, PA 15222, and at any adjournments or postponements thereof, as follows:final tabulation. (Continued and to be signed on the reverse side.) 14475 1.1