UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.     )

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

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Equitrans Midstream Corporation

(Name of Registrant as Specified In Its Charter)

   

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

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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 annual meeting of shareholders on Tuesday, April 26, 2022, at 9:00 a.m. (ET), to be held virtually via live webcast at www.virtualshareholdermeeting.com/ETRN2022. Given 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, conducting our meeting virtually will enhance shareholders’ ability to participate, vote, and ask questions during the annual meeting in a safe and efficient manner.

Equitrans Midstream began operations as an independent, public company in November 2018 and our common stock is traded on the New York Stock Exchange under the symbol “ETRN.” Your continued interest in and support of our Company is invaluable and receiving shareholder feedback is instrumental to our future success.

This 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 2021 (the say-on-pay vote), approval of the Equitrans Midstream Corporation Employee Stock Purchase Plan and ratification of the appointment of our independent registered public accounting firm for 2022. The proxy statement describes these items in more detail. Your vote is important — please read the proxy materials and follow the voting instructions to ensure your shares are represented at the meeting.

Whether or not you plan to participate in the annual meeting, please vote as soon as possible — by telephone, via the Internet, or by completing and signing your paper proxy card or vote instruction form — to ensure that your shares are represented and voted.

Equitrans moves the energy that keeps America moving and our mission is simple — to provide safe, reliable, sustainable, and innovative infrastructure solutions for the energy industry. The principles that guide our behaviors and decisions are based on our five core values: safety, integrity, collaboration, transparency, and excellence. With these values in mind, we will continue to work diligently to:

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Create value for our shareholders

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Provide an engaging workplace for our employees

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Preserve and protect the environment

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Support the communities where we live and work

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As an energy infrastructure company, we acknowledge the reality of climate change as one of the most critical issues of our time, requiring a concerted global effort to reduce greenhouse gas emissions, adapt and build resiliency to changes in the climate system, and effectively manage both risks and opportunities as society transitions to a lower-carbon economy. As such, Equitrans Midstream must aggressively pursue climate change mitigation and adaptation, while also balancing the immediate and increasing need for energy in our country, now and in the future. I look forward to reporting on our progress and many successes, most particularly our efforts to enhance our Environmental, Social, and Governance performance.

Thank you for your investment in Equitrans Midstream Corporation and your participation in our annual meeting of shareholders.

Thomas F. Karam​

Chairman and Chief Executive Officer

 

​	Proxy Statement Summary	​	​	​	​	i	​	​
​	Item No. 1 — Election of Directors	​	​	​	​	1	​	​
​	Director Nominees	​	​	​	​	3	​	​
​	Corporate Governance and Board Matters	​	​	​	​	7	​	​
​	Board Meetings and Committees	​	​	​	​	7	​	​
​	Compensation Process	​	​	​	​	10	​	​
​	Board Leadership Structure	​	​	​	​	12	​	​
​	Board’s Role in Risk Oversight	​	​	​	​	13	​	​
​	Director Nominations	​	​	​	​	14	​	​
​	Contacting the Board	​	​	​	​	16	​	​
​	Governance Principles	​	​	​	​	16	​	​
​	Independence and Related Person Transactions	​	​	​	​	19	​	​
​	Compensation Committee Interlocks and Insider Participation	​	​	​	​	21	​	​
​	Directors’ Compensation	​	​	​	​	22	​	​
​	Equity-Based Compensation	​	​	​	​	22	​	​
​	Deferred Compensation	​	​	​	​	22	​	​
​	Stock Ownership Guidelines	​	​	​	​	23	​	​
​	Other	​	​	​	​	23	​	​
​	2021 Directors’ Compensation Table	​	​	​	​	23	​	​
​	Equity Ownership	​	​	​	​	24	​	​
​	Stock Ownership of Significant Shareholders	​	​	​	​	24	​	​
​	Equity Ownership of Directors and Executive Officers	​	​	​	​	25	​	​
​	Delinquent Section 16(a) Reports	​	​	​	​	26	​	​
​	Executive Compensation Information	​	​	​	​	27	​	​
​	Compensation Discussion and Analysis	​	​	​	​	27	​	​
​	Our 2021 Named Executive Officers	​	​	​	​	27	​	​
​	Executive Summary	​	​	​	​	28	​	​
​	Compensation Philosophy and Practices	​	​	​	​	29	​	​
​	How We Determine Executive Compensation	​	​	​	​	31	​	​
​	2021 Compensation Program Elements	​	​	​	​	33	​	​
​	Other Considerations Important to Our Compensation Program	​	​	​	​	38	​	​
​	Report of the Management Development and Compensation Committee	​	​	​	​	40	​	​
​	Executive Compensation Tables	​	​	​	​	41	​	​
​	Summary Compensation Table	​	​	​	​	41	​	​
​	2021 Grants of Plan-Based Awards Table	​	​	​	​	42	​	​

​	Narrative Disclosure to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table	​	​	​	​	43	​	​
​	Outstanding Equity Awards at Fiscal Year-End	​	​	​	​	44	​	​
​	Stock Vested	​	​	​	​	46	​	​
​	Potential Payments Upon Termination or Change of Control	​	​	​	​	46	​	​
​	Pay Ratio Disclosure	​	​	​	​	52	​	​
​	Employee, Officer and Director Hedging	​	​	​	​	52	​	​
​	Item No. 2 — Advisory Vote on the Compensation of the Company’s Named Executive Officers for 2021 (Say-On-Pay)	​	​	​	​	53	​	​
​	Item No. 3 — Approval of the Equitrans Midstream Corporation Employee Stock Purchase Plan	​	​	​	​	54	​	​
​	Report of the Audit Committee	​	​	​	​	58	​	​
​	Item No. 4 — Ratification of Appointment of Independent Registered Public Accounting Firm	​	​	​	​	60	​	​
​	Securities Authorized for Issuance Under Equity Compensation Plans	​	​	​	​	62	​	​
​	Equitrans Midstream Corporation Directors’ Deferred Compensation Plan	​	​	​	​	62	​	​
​	Additional Information	​	​	​	​	63	​	​
​	Proposals, Board Recommendations, Vote Required, and Broker Non-Votes	​	​	​	​	63	​	​
​	Corporate Secretary Contact Information	​	​	​	​	63	​	​
​	Notice of Internet Availability of Proxy Materials	​	​	​	​	63	​	​
​	Voting Instructions	​	​	​	​	64	​	​
​	Participating in the Annual Meeting	​	​	​	​	66	​	​
​	Other Matters	​	​	​	​	67	​	​
​	Appendices	​	​	​	​	A-1	​	​
​	Appendix A — Equitrans Midstream Corporation Employee Stock Purchase Plan	​	​	​	​	A-1	​	​
​	Appendix B — Related Person Transactions with EQT	​	​	​	​	B-1	​	​
​	Appendix C — Non-GAAP Financial Information	​	​	​	​	C-1	​	​

 

 

 

MATTERS TO BE VOTED UPON

 

ii   Equitrans Midstream Corporation – 2022 Proxy Statement

 

 

Equitrans Midstream Corporation – 2022 Proxy Statement   iii

 

GOVERNANCE HIGHLIGHTS

BUSINESS HIGHLIGHTS

While the COVID-19 pandemic is continuing, the outbreak has had, and continues to have, a minimal direct impact on the Company’s overall operations. The Company continues to actively manage its response to the COVID-19 pandemic in collaboration with relevant parties and, given that the situation surrounding COVID-19 remains fluid, a number of Company-wide measures undertaken in response to COVID-19 remain in effect to continue to promote the safety and health of field and office-based employees and contractors.

On November 4, 2021, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) issued an Emergency Temporary Standard (ETS) and to carry out President Biden’s executive order requiring all employers with at least 100 employees ensure that their employees are fully vaccinated or require unvaccinated workers to produce a negative test result at least once a week. On January 13, 2022, the U.S. Supreme Court granted an application to stay the ETS pending disposition of the applicants’ petitions for review in the U.S. Court of Appeals for the Sixth Circuit. Effective January 26, 2022, OSHA withdrew the ETS as an enforceable emergency temporary standard, but did not withdraw the ETS as a proposed rule. Should the ETS, or a similar state or local requirement, take effect in the future, the Company expects it would be subject to such regulation concerning COVID-19 vaccination or testing. In that case, the Company may be required to implement a requirement that many or most employees get vaccinated, subject to limited exceptions, or be tested, resulting in additional costs to the Company. At this time, it is not possible to predict the impact that a vaccine or testing requirement would have on the Company or its workforce. Any such mandate may result in increased costs, operational disruptions or employee attrition for the Company.

 

iv   Equitrans Midstream Corporation – 2022 Proxy Statement

 

Notwithstanding the outbreak’s minimal direct impact to date on the Company’s overall operations, the Company acknowledges that the COVID-19 pandemic is still ongoing and therefore the Company cannot predict that the pandemic, or further developments regarding variants of COVID-19 or other governmental action, will not have any impact in the future on the Company’s business, results of operations or financial position.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) HIGHLIGHTS

The Company recognizes that the long-term interests of shareholders are served by managing ESG matters important to the Company’s stakeholders and working to be resilient and appropriately positioned in any environment, including a lower-carbon economy. The Company has, throughout its corporate history, embraced conducting business in a socially responsible and ethical manner by respecting all stakeholders and is focused on identifying and executing on ESG and sustainability initiatives while further integrating corporate responsibility and ESG concerns into its business strategy and decision-making throughout the organization.

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 (TDC) 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 2021 annual meeting, our say-on-pay proposal received support from over 98% of our shares voted, leading the Compensation Committee to believe our compensation programs and practices have strong shareholder support. The primary components of our 2021 compensation program were:

 

Equitrans Midstream Corporation – 2022 Proxy Statement   v

 

*

See Appendix C for important information regarding the non-GAAP financial measures Economic Adjusted EBITDA (defined below) and free cash flow.

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The compensation program is designed to provide an appropriate mix of fixed and variable pay to encourage retention and promote creation of 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 2021 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 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 41 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.

*

Amounts shown above reflect the core components of our 2021 executive compensation program and do not include the special, one-time, performance-based Mountain Valley Pipeline-related awards described later in the section “Compensation Discussion and Analysis.”

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vi   Equitrans Midstream Corporation – 2022 Proxy Statement

 

IMPORTANT DATES FOR 2023 ANNUAL MEETING OF SHAREHOLDERS

Shareholder proposals submitted for inclusion in Equitrans Midstream’s 2023 proxy statement under SEC rules must be submitted in writing and received by Equitrans Midstream’s Corporate Secretary on or before November 9, 2022.

Under Equitrans Midstream’s Third Amended and Restated Bylaws (the Bylaws), if a shareholder would like to present a matter not included in Equitrans Midstream’s proxy statement in person at the 2023 annual meeting of shareholders, including nominations for director candidates, advance notice must be submitted in writing and received by Equitrans Midstream’s Corporate Secretary no earlier than the close of business on December 27, 2022, and no later than the close of business on January 26, 2023.

Under Equitrans Midstream’s proxy access Bylaws provision, a shareholder, or group of twenty or fewer shareholders, 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 Equitrans Midstream representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in Equitrans Midstream’s proxy statement director nominees constituting the greater of  (i) two and (ii) 20% of the Board of Directors of Equitrans Midstream provided that such nominations are submitted in writing and received by our Corporate Secretary no earlier than the close of business on October 10, 2022 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting) and no later than the close of business on November 9, 2022 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting).

For additional information, see “Additional Information — Shareholder Proposals and Director Nominations” on page 67 of this proxy statement.

 

Equitrans Midstream Corporation – 2022 Proxy Statement   vii

 

 

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, 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 – 2022 Proxy Statement

 

Director Nominees

Ms. Bailey has served as President, Anderson Stratton Enterprises, LLC (strategic consulting and government relations), since November 2005, and was previously Vice President and owner, BHMM Energy Services, LLC (a certified minority owned energy facility management company), from January 2006 to 2013. 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 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 Cinergy/PSI Energy, Inc. (a regulated utility) (now part of Duke Energy) 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 Domestic 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.

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 Nominating and Governance 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 National Association of Corporate Directors (NACD) Directorship CertifiedTM and is a Board Leadership Fellow, demonstrating her commitment to the highest standards of board leadership.

Ms. Barpoulis is a member of the Corporate Governance Committee and a member of the HSSE Committee.

 

Equitrans Midstream Corporation – 2022 Proxy Statement   3

 

Mr. Burke was a Partner at Ernst & Young LLP (EY) (a Big Four accounting firm) from October 1982 through June 2004. Mr. Burke served on the board of directors of Nexeo Solutions, Inc. (a publicly traded global chemical distributor) from November 2011 until its acquisition in March 2019. Mr. Burke also was appointed to the boards of directors of the general partners of EQM Midstream Partners, LP (EQM) and EQGP Holdings, LP (EQGP), both of which were publicly traded master limited partnerships controlled by the Company, in September 2018, 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, respectively (the acquisition of outstanding public common units of EQM in June 2020, the EQM Merger). 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.

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 the Lead Independent Director of EVgo, Inc. (a provider of a public fast charging network for electric vehicles) since July 2021, where she serves as the chair of its Audit Committee and as a member of its Compensation Committee and Nominating and Corporate Governance Committee. Ms. Collawn tendered her resignation from the board of directors of EVgo Inc., which resignation is to be effective March 31, 2022. Ms. Collawn also has served as an independent director of Cheniere since July 2021, where she serves as a member of its Audit Committee and Compensation Committee. Ms. Collawn was also an independent director of CTS Corporation (a publicly traded designer and manufacturer of sensors, actuators and electronic components for various industries) from 2003 to May 2021, most recently serving as the Chair of the Compensation Committee and a member of the Nominating and Governance Committee.

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 and operating utility engaged primarily in the generation, purchase, transmission, distribution, and sale of electricity. 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 a member of the HSSE Committee.

 

4   Equitrans Midstream Corporation – 2022 Proxy Statement

 

Mr. Karam was appointed Chairman of the Board of Directors and Chief Executive Officer of Equitrans Midstream in July 2019. Prior to that, Mr. Karam served as President and Chief Executive Officer of Equitrans Midstream since September 2018 and a member of the Board of Equitrans Midstream since November 2018. Prior to Equitrans Midstream, he served as Senior Vice President, EQT Corporation and President, Midstream from August 2018 until the Separation in November 2018. Mr. Karam also served as the Chairman and Chief Executive Officer of EQM’s general partner from July 2019 until the closing of the EQM Merger, 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 to October 2018. Mr. Karam served on EQT’s board of directors from November 2017 until the Separation. Mr. Karam was the founder and served as Chairman of Karbon Partners, LLC, which invests in, owns, constructs and operates midstream energy assets, from April 2017 to August 2018. Mr. Karam was the founder and previously served as Chairman and Chief Executive Officer of PennTex Midstream Partners, LP, a publicly traded master limited partnership with operations in North Louisiana and the Permian Basin (PennTex), from 2014 until the sale of its general partner to Energy Transfer Partners in 2016.

Qualifications: Mr. Karam has been a senior executive and entrepreneur in the midstream energy sector for more than 25 years. Preceding PennTex, he was the founder, Chairman and Chief Executive Officer of Laser Midstream Partners, LLC (Laser), one of the first independent natural gas gathering systems in the northeast Marcellus Shale, from 2010 until 2012 when it was acquired by Williams Partners L.P. Prior to Laser, Mr. Karam was the President, Chief Operating Officer and director of Southern Union Company, where he led its successful transformation from a large local distribution company to one of the largest pipeline companies in the United States at the time. Prior to Southern Union Company, Mr. Karam was the President and Chief Executive Officer of Pennsylvania Enterprises and PG Energy, a natural gas utility in central and northeastern Pennsylvania, until its acquisition by Southern Union Company. He began his professional career in investment banking with Legg Mason Inc. and Thomson McKinnon.

 

Equitrans Midstream Corporation – 2022 Proxy Statement   5

 

Mr. Leland served as Interim Chief Executive Officer of Deltic Timber Corporation from October 2016 to March 2017, prior to the company’s merger with Potlatch Corporation to form PotlatchDeltic Corporation (a publicly traded timberland real estate investment trust) (PotlatchDeltic) in February 2018. Mr. Leland has served as a director of PotlatchDeltic since February 2018 where he serves as a member of its Audit Committee and its Executive Compensation and Personnel Policies Committee. Mr. Leland has also served as a director and Chair of the Conflicts Committee and a member of the Audit Committee of Altus Midstream Company (and its predecessor) (a publicly traded midstream company providing gathering processing and transportation services in the Permian Basin) from April 2016 until the company’s merger with BCP Raptor Holdco LP in February 2022 forming Kinetik Holdings Inc. (a publicly traded fully integrated midstream business in the Delaware basin) (Kinetik). Mr. Leland has served as a director of Kinetik since February 2022, where he serves as Chair of its Audit Committee and a member of its Corporate Governance and Nominating Committee. Previously, he served as a director and Chair of the Audit Committee of Deltic Timber Corporation from June 2016 to February 2018 and the general partner of Rice Midstream Partners LP (RMP) from December 2014 until its merger with EQM in July 2018. Mr. Leland served on the board of directors of the general partner of Oiltanking Partners, L.P. (a publicly traded company providing terminaling, storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas) from June 2012 to February 2015 and on the board of directors of KiOR, Inc. (a publicly traded renewables fuel company) from June 2013 to March 2015.

Qualifications: Mr. Leland brings extensive operational and financial experience in the midstream energy industry, having served as President of El Paso Corporation’s (El Paso) midstream business unit from October 2009 to May 2012, and as director of El Paso Pipeline Partners, L.P. from its formation in 2007 to May 2012. Among other senior-level roles at El Paso, Mr. Leland also previously served as Executive Vice President and Chief Financial Officer of El Paso from August 2005 to October 2009. This experience as well as experience on the boards of numerous publicly traded and private energy companies provide significant contributions to the Board.

Mr. Leland is a member of the Audit Committee and a member of the Compensation Committee.

Mr. Szydlowski served as President and Chief Executive Officer of SemGroup from November 2009 through June 2014, and director of SemGroup from November 2009 through April 2014. Mr. Szydlowski served as a director of EQT from November 2017 until the Separation and as a director of the general partner of 8point3 Energy Partners, LP (a publicly traded joint venture formed to own and operate solar generation assets) from June 2015 until its acquisition by Capital Dynamics, Inc. in June 2018. He also served as a director of the general partner of JP Energy Partners LP (a publicly traded oil and natural gas company) from July 2014 through March 2017, a director of Transocean Partners, LLC (a publicly traded offshore drilling contractor) from November 2014 through December 2016, and a director of the general partner of NGL Energy Partners LP (a publicly traded company specializing in transportation, storage, blending and marketing of crude oils, natural gas, refined products, renewables and water solutions) from November 2011 through April 2014.

Qualifications: Mr. Szydlowski’s experience at SemGroup and before that as Chief Executive Officer of Colonial Pipeline Company (a refined pipeline system) and elsewhere provides him with significant executive and operational midstream experience. In particular, Mr. Szydlowski has a thorough understanding of the midstream business and midstream customers.

Mr. Szydlowski is Chair of the HSSE Committee and a member of the Compensation Committee.

 

6   Equitrans Midstream Corporation – 2022 Proxy Statement

 

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, Chair of its Health, Safety and Environmental Committee, and a member of the Audit and Nominating and Governance Committees, from January 2014 through EQT’s acquisition of Rice Energy in November 2017. From January 2014 to July 2018, Mr. Vagt also served on the board of directors of the general partner of RMP (acquired by EQM in July 2018), serving as board Chair from December 2014 through November 2017. Mr. Vagt has served as a director of Kinder Morgan, Inc. (a publicly traded energy infrastructure company) since May 2012, where he serves as a member of the Audit Committee and Chair of its Environmental, Health and Safety Committee.

Qualifications: Prior to his service to The Heinz Endowments and Davidson College, Mr. Vagt had significant executive and operational oil and gas industry experience, having served as President and Chief Operating Officer of Seagull Energy Corporation (an oil and gas exploration and production company) from 1996 to 1997, as President, Chairman and Chief Executive Officer of Global Natural Resources (a producer of oil and natural gas) from 1992 to 1996 and as President and Chief Operating Officer of Adobe Resources Corporation (an oil and natural gas production company) from 1989 to 1992. Mr. Vagt also served as a director of El Paso Corporation (a provider of natural gas and related energy products) (now part of Kinder Morgan, Inc.) from May 2005 to 2012, where he was a member of the Compensation and Health, Safety and Environmental Committees. Mr. Vagt’s professional background, including operations and management experience in both the public and private sectors, makes him an important advisor and member of Equitrans Midstream’s Board. 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.

CORPORATE GOVERNANCE AND BOARD MATTERS

Board Meetings and Committees

The Board currently has four standing Committees: Audit, Management Development and Compensation, Corporate Governance, and Health, Safety, Security and Environmental. The Board may from time to time form new Committees, disband an existing Committee and delegate additional responsibilities to a Committee. Our Committees report on their activities to the Board on a routine basis and also make recommendations regarding matters to be approved by the Board. The responsibilities of the Committees are included in written charters, which are reviewed at least annually by the Committees and the Board. All charters may be viewed on the Company’s website at www.equitransmidstream.com by clicking on “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 of our directors participated in the 2021 annual meeting.

In 2021, our Board held 10 meetings, with regular communication between meetings, and each of our directors serving on the Board during 2021 attended at least 95% of the aggregate meetings of our Board and the Committees on which he or she served. The following charts summarize each Committee’s primary responsibilities, membership and number of meetings held in 2021.

 

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​	​	Audit Committee				​	​
​	​	Members Kenneth M. Burke (Chair) D. Mark Leland Robert F. Vagt	​	​	Meetings Held in 2021: 10	​	​
​	​	Primary Responsibilities:   The Audit Committee assists the Board by overseeing: ➢ the accounting and financial reporting processes of the Company and related disclosure matters; ​ ➢ the audits of the Company’s financial statements; ​ ➢ the integrity of the Company’s financial statements; ​ ➢ the qualifications, independence, and performance of the Company’s registered public accountants; ​ ➢ the qualifications and performance of the Company’s internal audit function; and ​ ➢ compliance with legal and regulatory requirements, including with the Company’s code of business conduct and ethics. ​ 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 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, Messrs. Burke, Leland and Vagt also have accounting or related financial management experience under applicable NYSE listing standards.				​	​

​	​	Management Development and Compensation Committee				​	​
​	​	Members Margaret K. Dorman (Chair) Patricia K. Collawn D. Mark Leland Norman J. Szydlowski	​	​	Meetings Held in 2021: 9	​	​
​	​	Primary Responsibilities:   The Compensation Committee: ➢ assists the Board in the discharge of its fiduciary responsibilities relating to agreements with, and the fair and competitive compensation of, the CEO and other executive officers; ​ ➢ designs, administers and makes awards (or, as applicable, makes recommendations to the Board to make awards) under the Company’s incentive compensation and equity-based plans; ​ ➢ provides oversight for and, as required, administers the Company’s benefit plans; ​ ➢ oversees the Company’s management development program for the Company’s executive officers and other key members of management; ​ ➢ oversees such aspects of the Company’s policies, programs and strategies related to corporate social responsibility and sustainability, including management development and compensation matters identified as part of the Company’s evaluation of ESG concerns; and ​ ➢ prepares a report for inclusion in the Company’s proxy statement for the annual meeting of shareholders. ​ 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 meets the independence requirements of the NYSE or any other national securities exchange on which the securities of the Company are listed and applicable federal securities law, including the rules and regulations of the SEC.				​	​

 

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​	​	Corporate Governance Committee				​	​
​	​	Members Vicky A. Bailey (Chair) Sarah M. Barpoulis Kenneth M. Burke Margaret K. Dorman	​	​	Meetings Held in 2021: 5	​	​
​	​	Primary Responsibilities:   The Corporate Governance Committee is responsible for: ➢ establishing and recommending to the Board the requisite skills and characteristics to be found in individuals qualified to serve as directors; ​ ➢ identifying individuals qualified to become Board members consistent with criteria approved by the Board; ​ ➢ recommending to the Board the director nominees for each annual meeting of shareholders; ​ ➢ reviewing and recommending to the Board any updates to the Company’s corporate governance guidelines; ​ ➢ recommending Committee membership, including a Chair, for each Committee; ​ ➢ recommending an appropriate compensation structure for the directors, including administration of stock-based plans for the directors; ​ ➢ reviewing plans for management succession for all executive officers other than the CEO (which is overseen by the Board); ​ ➢ recommending director independence determinations to the Board; ​ ➢ providing oversight for the corporate governance of the Company, including in connection with the corporate governance aspects of the Company’s policies, programs and strategies related to corporate social responsibility and sustainability and governance-related factors identified as part of the Company’s evaluation of ESG concerns; and ​ ➢ reviewing related person transactions under the Company’s related person transaction approval policy. ​ Independence:   Each member of the Committee is independent under the Company’s corporate governance guidelines and applicable NYSE listing standards.				​	​

​	​	Health, Safety, Security and Environmental Committee				​	​
​	​	Members Norman J. Szydlowski (Chair) Vicky A. Bailey Sarah M. Barpoulis Patricia K. Collawn	​	​	Meetings Held in 2021: 6	​	​
​	​	Primary Responsibilities:   The HSSE Committee: ➢ provides input and direction to management and the Board about the Company’s approach to health, safety, security (including cybersecurity), and environmental policies, programs and initiatives, including HSSE aspects of the Company’s policies, programs and strategies related to corporate social responsibility and sustainability (and HSSE-related factors identified as part of the Company’s evaluation of ESG concerns) 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, including, without limitation, the Company’s emergency response preparedness and HSSE matters relating to corporate social responsibility and sustainability and HSSE-related factors identified as part of the Company’s evaluation of ESG concerns; ​ ➢ periodically reviews reports from management with respect to significant risk exposures related to HSSE (including, without limitation, risks relating to energy transition, emissions and climate change, as well as biodiversity matters) and advises the Board on management’s procedures for monitoring, controlling and reporting on such exposures; ​ ➢ reviews the Company’s disclosures regarding the Committee’s role in the oversight of the Company’s HSSE-related risk management; and ​ ➢ ensures that appropriate HSSE goals are in place and evaluates the Company’s progress toward those goals. ​				​	​

 

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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 TDC for NEOs 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 the section titled “Compensation Discussion and Analysis — Determination of Target Total Direct Compensation (TDC)” below. When appropriate, the Compensation Committee also provides certain limited perquisites and other benefits to executive officers and other key employees.

The Compensation Committee, with the approval of the Board,establishes the plan designs and performance metrics for all of the Company’s short-term and long-term incentive programs. The Compensation Committee also sets target and maximum metrics and related payouts under the Company’s programs for executive officers and reviews the appropriateness of these for all other Company personnel. After completion of the performance period, the Compensation Committee reviews actual performance in comparison to established metrics to determine the amount of short-term and long-term incentive awards earned for each executive officer and for other Company personnel in total.

The Compensation Committee has retained the services of Mercer (US) Inc. (Mercer) as its independent consultant to aid the Compensation Committee in performing its duties. Representatives of Mercer provided the Compensation Committee with market data and counsel regarding executive officer compensation programs and practices, discussed in more detail in the 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 executive officer.

Certain executive officers may review information with the Compensation Committee during meetings and may present management’s views or recommendations. Our executive team occasionally consults with Willis Towers Watson, its own compensation consultant, when developing its views or recommendations regarding executive compensation matters. The Compensation Committee evaluates these recommendations including, if desired, in consultation with its independent compensation consultant, and takes them into consideration when making the Compensation Committee’s decisions and recommendations. When establishing TDC for executive officers and reviewing actual performance against established metrics, the Compensation Committee considers the CEO’s compensation recommendations. The CEO does not participate in Compensation Committee or Board deliberations about his compensation.

The Compensation Committee has delegated limited authority to Mr. Karam, in his capacity as a director of the Company, to issue special bonus payments and grant certain long-term incentive awards under the Equitrans Midstream Corporation 2018 Long-Term Incentive Plan (as amended, the ETRN LTIP). These awards must follow established guidelines, are reviewed by the Compensation Committee on a quarterly basis, and include New Hire, CEO, Retention and Discretionary New Hire Awards.

The Compensation Committee has approved a pre-established basket to provide for off-cycle New Hire awards pursuant to the following guidelines:

➢

Individuals hired after the annual grant date who would have qualified for a grant may be awarded restricted shares or units in an amount not to exceed the median target for the position. Under this limited authorization, individual grants may not exceed $75,000 and would not apply to newly hired executive officers or direct reports of the CEO.

​

➢

The aggregate award value of all awards under this basket as of the date of any grant may not exceed $725,000.

​

 

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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, in each case, other than executive officers and direct reports of the CEO pursuant to the following guidelines:

➢

CEO Awards are for the purpose of recognizing individual performance achievement as follows:

​

◦

Individuals that have received ETRN LTIP grants as part of the annual award cycle are eligible to receive cash awards limited to $20,000 per employee per grant.

​

◦

Individuals that have not received ETRN LTIP grants as part of the annual award cycle are eligible to receive ETRN restricted units, cash or any combination thereof with the award value limited to $20,000 per employee per grant.

​

➢

Retention Awards are for the purpose of addressing compensation for key personnel that have been offered employment outside the company with more favorable equity-based compensation arrangements.

​

➢

Discretionary New Hire Awards consisting of restricted stock units may be made to newly hired employees not otherwise entitled to a New Hire award discussed above on the condition that no award exceeds $25,000 per employee per grant.

​

➢

In each case, the aggregate award value of all awards under this basket granted as of the date of any grant may not exceed $200,000.

​

The Compensation Committee has not delegated its authority to award equity to any other executive officer.

We provide additional information regarding the Compensation Committee and the Company’s policies and procedures regarding executive compensation below under “Compensation Discussion and Analysis.”

 

Equitrans Midstream Corporation – 2022 Proxy Statement   11

 

Board Leadership Structure

As described in the Company’s corporate governance guidelines, the Board of Directors believes that the functions of the Chairman of the Board are distinct from those of the CEO 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 CEO should be separate, and if separate, whether the Chairman should be an outside director or an inside director. In July 2019, the Board concluded that combining the functions of Chairman and CEO was the most effective leadership structure for the Company and appointed Mr. Karam as the Chairman of the Board. The Board reaffirmed its conclusion in April 2021 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 2022 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 the Lead Independent Director if recommended by the Corporate Governance Committee and approved by the Board.

In April 2021, the Board, based on a recommendation from the Corporate Governance Committee, re-elected Mr. Vagt to serve as Lead Independent Director of the Board for a one-year term. Mr. Vagt has held this position since the Separation.

 

12   Equitrans Midstream Corporation – 2022 Proxy Statement

 

 

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​	​	Management	​	​
​	​	➢ The Company’s Enterprise Risk Committee, composed of certain executive officers and other members of management who oversee day-to-day risk management, meet periodically throughout the year to review, prioritize and address the Company’s major risk exposures and consider new or emerging risks, the results of which are reported to the Board on a regular basis. ​	​	​

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 the Company’s annual meeting of shareholders.

When assessing new director candidates for nomination, regardless of who recommends the candidate for consideration, the Corporate Governance Committee will consider the background, diversity, personal characteristics and business experience of the candidate against the ideal attributes identified below. Candidates generally possessing these attributes are further evaluated against the current needs of the Company to determine the appropriate fit in light of overall Board composition. The Corporate Governance Committee reviews the attributes from time to time and recommends revisions for approval by the Board as the Corporate Governance Committee considers appropriate.

 

14   Equitrans Midstream Corporation – 2022 Proxy Statement

 

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 December 27, 2022, and no later than the close of business on January 26, 2023.

A submitting shareholder must provide the following:

➢

The information required by Sections 1.09 and 1.10 of the Company’s Bylaws (a copy of which will be provided to any shareholder upon written request to the Corporate Secretary), including, but not limited to, (i) the proposing person’s timely written notice; (ii) the nominee’s written questionnaire with respect to the background and qualifications of such nominee and the background of any other person or entity on whose behalf the nomination is being made; (iii) a written representation and agreement of the nominee in the form provided by the Corporate Secretary; and (iv) the nominee’s executed irrevocable conditional resignation letter.

​

➢

Updates and supplements to any information previously submitted to the Corporate Secretary.

​

➢

In addition, the Company may require the shareholder to provide such further information as the Company may reasonably request.

​

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 10, 2022 (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 9, 2022 (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:

➢

The information required by Sections 1.09 and 1.10 of the Company’s Bylaws (a copy of which will be provided to any shareholder upon written request to the Corporate Secretary), including, but not limited to, (i) the proposing person’s timely written notice; (ii) the nominee’s written questionnaire with respect to the background and qualifications of such nominee and the background of any other person or entity on whose behalf the nomination is being made; (iii) a written representation and agreement of the nominee in the form provided by the Corporate Secretary; and (iv) the nominee’s executed irrevocable conditional resignation letter.

​

➢

The information required by Section 1.11 of the Company’s Bylaws, including, but not limited to, (i) all other questionnaires required of the Company’s directors; and (ii) such additional information as is necessary to permit the Board to determine that the director nominee is independent and that the nominee’s service as a member of the Board would not violate any applicable law, rule or regulation, or the NYSE listing standards.

​

Please see “Corporate Secretary Contact Information” under the caption “Additional Information” on page 63.

 

Equitrans Midstream Corporation – 2022 Proxy Statement   15

 

 

16   Equitrans Midstream Corporation – 2022 Proxy Statement

 

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	​	​
​	​	➢ The Board has adopted corporate governance guidelines ​ ➢ Our directors are elected annually for a term of one year ​ ➢ We have a Lead Independent Director with defined duties ​ ➢ Eight of the nine members of the Board and seven of our eight director nominees are independent of the Company and its management ​ ➢ The Board’s independent/non-management directors meet regularly in executive session, and the Lead Independent Director presides over and sets the agenda for sessions of the independent/non-management directors ​ ➢ All members of each of the Audit, Compensation, Corporate Governance and HSSE Committees are independent of the Company and its management ​ ➢ Each of the Audit, Compensation, and Corporate Governance Committees has a charter that meets applicable legal requirements and reflects good corporate governance ​ ➢ The HSSE Committee has a charter that reflects good corporate governance ​ ➢ The Board and each Board Committee engage in annual self-assessments ​ ➢ The Company’s directors are encouraged to participate in educational programs relating to corporate governance and business-related issues, and the Company provides funding for such activities ​ ➢ The Company has a code of business conduct and ethics applicable to all employees and directors of the Company ​ ➢ Our Bylaws require that any nominee for election to the Board who does not receive a majority of the votes cast in favor of that director’s election to the Board in an uncontested election must tender his or her conditional resignation to the Board ​ ➢ The Company has robust stock ownership requirements for executive management and the members of the Board ​ ➢ A director may not be nominated for re-election to our Board after the director has 12 years of service on our Board or reaches the age of 76 ​ ➢ Our Bylaws provide that shareholders meeting certain requirements may submit candidates for director to be included in our proxy statement ​ ➢ The Compensation Committee has adopted a robust clawback policy, applicable to current and former executive officers of the Company ​ ➢ In 2021, following shareholder approval, we removed the supermajority voting requirements from our Articles of Incorporation and Bylaws ​	​	​

Shareholder Engagement

We value feedback from our shareholders and are committed to engaging in an active dialogue with our shareholders year-round. During 2021, our management team spent a significant amount of time meeting and speaking to our shareholders. We welcome feedback from our shareholders and strive to maintain the best governance, compensation and oversight practices.

Sustainability and Corporate Responsibility

Throughout our corporate history, we have embraced conducting business in a socially responsible and ethical manner, and we believe that our continued focus and execution on ESG and sustainability initiatives over time

 

Equitrans Midstream Corporation – 2022 Proxy Statement   17

 

will serve to distinctly position us and create value. We are committed to continuing to operate with integrity, accountability and transparency by respecting all stakeholders, and are focused on identifying and executing on ESG and sustainability initiatives while further integrating corporate responsibility and ESG concerns into our business strategy and decision-making throughout the organization. We have highlighted below certain important steps that we have taken to further communicate, structure, and embed within our operations our sustainability practices.

➢

Continued Enhanced Transparency Through Sustainability Reporting.   In 2021, we published our second annual corporate sustainability report (CSR), in accordance with the Global Reporting Initiative (GRI) Core option and the Sustainability Accounting Standards Board (SASB) Oil & Gas — Midstream Standards. Our 2021 CSR highlights our top-tier ESG topics and external stakeholder engagement. Our 2021 CSR builds and expands on our 2020 CSR by adding five new ESG topic areas and refined management and reporting on the topics of biodiversity, ecosystems, and environmental resources. We also have expanded content disclosure in several areas, including community engagement, diversity and inclusion, and occupational health and safety. The 2021 CSR outlines our continued success in improving our environmental, health, and safety metrics and covers our social policies and programs. The report outlines our progress towards our commitment to reducing methane emissions from our natural gas pipeline assets and other initiatives to reduce greenhouse gas emissions (GHG) from our operations.

​

We also submitted and received a score for our first CDP Climate Change questionnaire response, which provides additional transparency about our climate governance, strategy, risks, and opportunities. Providing this information to our investors, customers, and other stakeholders demonstrates our focus on mitigating our climate impact and preparing for the transition to a lower-carbon economy.

➢

Clear Board and Executive Oversight of, and Enhanced Internal Resources Focused on Sustainability and Corporate Responsibility.   Our Board of Directors, acting through its committees, oversees our policies, programs, and strategies related to corporate social responsibility and sustainability, including ESG matters and related risks and opportunities, such as those related to climate change, and regularly receives reports from our Chief Sustainability Officer (CSO) and broader management. Our management-level Enterprise Risk Committee is responsible for reviewing, prioritizing and addressing our major risk exposures and considering new or emerging risks, including related to ESG. To further realize opportunities and manage risk, we established a management level ESG Committee and six ESG Working Groups in 2021 to help implement and manage the day-to-day efforts and actions related to material ESG and sustainability topics, including a research and development committee that evaluates new technologies that may enable us to further incorporate aspects of sustainability into our operations. The ESG Working Groups are directly overseen by our CSO through the ESG Committee.

​

Sustainability-focused risks and opportunities are incorporated into our strategic and capital spending decision processes. For example, among other initiatives, in 2021 we made investments to replace high-bleed pneumatic devices with low-bleed pneumatic devices and replace gas-driven pneumatics with instrument air systems to reduce methane emissions relative to 2019 baseline levels in support of our publicized climate policy (discussed below) and GHG reduction goals. We expect to continue to pursue strategic sustainability initiatives as appropriate, including in respect of climate change.

➢

Publication of Our Climate Policy, Human Rights Policy and Biodiversity Statement.   In January 2021, we published our initial Climate Policy, which acknowledges the reality of climate change as one of the most critical issues today and outlines our commitment and aspirations to reduce our carbon footprint. We have implemented programs designed to reduce GHG emissions from our operations to meet our voluntary reduction targets. Our efforts to reduce GHG emissions have initially targeted methane emissions reductions including: conducting leak detection and repairs at facilities; reducing blowdowns by scheduling multiple maintenance activities during a single shutdown period; replacing high-bleed pneumatic devices with low-bleed pneumatic devices; and replacing gas-driven pneumatics with air-driven systems. In addition, we are reviewing operational practices that can be implemented to reduce emissions as well as evaluating other existing technologies and emerging technologies that can reduce our carbon impact. Additionally, in 2021, we continued to develop and refine our 2019 GHG inventory, which serves as the baseline for measurement of our progress towards the emission reduction aspirations outlined in our Climate Policy. Lastly, we supported industry methane reduction efforts by formally opposing the United States Environmental Protection Agency’s proposed rollback of methane regulations in 2020 and reaffirmed our opposition in 2021.

​

 

18   Equitrans Midstream Corporation – 2022 Proxy Statement

 

In 2021, we also released additional policies and statements to outline our commitment to incorporating sustainability throughout our operations, including our Human Rights Policy, Supplier Code of Conduct, Stakeholder Engagement and Community Investment Plan, and a Biodiversity Statement. Upholding human rights is critical for creating sustainable value for us and the communities in which we operate, and our Human Rights Policy affirms our commitment to upholding dignity and respect for all people throughout our value chain. To further our commitment to our value chain, we implemented a Supplier Code of Conduct to outline environmental, social, and governance expectations for organizations and individuals in our value chain. Our Stakeholder Engagement and Community Investment Policy describes our strategy to support local communities through financial and non-financial contributions. Our Biodiversity Statement acknowledges our obligation to operate in a manner that promotes the protection, conservation, and sustainable use of biologically diverse ecosystems and habitats while providing a reliable energy infrastructure.

➢

Linking Compensation to Meaningful Safety and Sustainability Goals.   Building on our continued emphasis of safe operations — above all else — and to further emphasize our commitment to sustainability, the Compensation Committee set safety- and sustainability-related performance goals in our 2021 short-term incentive plan (STIP), including metrics for incidents with serious potential and observations and methane emission mitigation. Our emphasis on sustainability through our STIP target enabled us to achieve a meaningful reduction in methane emissions from pneumatic devices relative to 2019 baseline levels.

​

More information regarding our sustainability initiatives is available on our website (www.equitransmidstream.com) by selecting the “Sustainability” tab on the main page. Information included on our website, including the CSR, CDP Climate Change Questionnaire Response, Climate Policy, Human Rights Policy, Supplier Code of Conduct, Stakeholder Engagement and Community Investment Plan, and Biodiversity Statement, 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. These corporate governance guidelines may be found on the Company’s website at 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 the Company’s corporate governance guidelines and is not otherwise a related person transaction under the Company’s related person transaction approval policy (the related person transaction policy) is deemed to be an immaterial relationship not requiring consideration by the Board in assessing independence. In the first quarter of 2022, our Board, in coordination with our Corporate Governance Committee, made an independence determination for each of our directors and affirmatively determined that all of our directors are independent, other than Mr. Karam.

Director ownership of Company stock is encouraged and is not in itself a basis for determining that a director is not independent, provided that such ownership may preclude participation on the Audit Committee if its magnitude is sufficient to make the director an affiliated person of the Company as described in the Audit Committee charter. See “Equity-Based Compensation” under the caption “Directors’ Compensation” below for a description of the stock ownership guidelines for directors.

Review, Approval or Ratification of Transactions with Related Persons

Our Board has adopted a related person transaction policy. Under the policy, it is the responsibility of the Corporate Governance Committee to conduct a prior review of Related Person Transactions (as defined below) not otherwise approved by the independent members of the Board. Company management, with the assistance

 

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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, or in certain cases the Chair of the Corporate Governance Committee followed by a report to the Corporate Governance Committee, determines whether to approve, revise, reject, or take other action with respect to the Related Person Transaction.

Under the related person transaction policy, a Related Person Transaction is generally a transaction in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and a Related Person has a direct or indirect material interest in the transaction. A Related Person is generally any person who is a director or executive officer of the Company, any nominee for director, any shareholder known to the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, and any immediate family member (as defined by the SEC) of any of the foregoing persons.

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:

➢

transactions involving employment of an executive officer by the Company, as long as the executive officer is not an immediate family member of another executive officer or director of the Company and the compensation paid to the executive officer was approved by the Compensation Committee;

​

➢

transactions involving compensation and benefits paid to a director for service as a director of the Company;

​

➢

transactions on competitive business terms with another company in which the only relationship of a director or immediate family member of a director is as (i) an employee or executive officer, (ii) a director, or (iii) a beneficial owner of less than 10% of that company’s shares, provided that the aggregate amount involved does not exceed the greater of  $1,000,000 or 2% of the other company’s consolidated gross revenue;

​

➢

transactions where the interest of the Related Person arises solely from the ownership of a class of equity securities of the Company, and all holders of that class of equity securities receive the same benefit on a pro-rata basis (e.g., payment of dividends);

​

➢

transactions where the rates or charges involved are determined by competitive bids;

​

➢

transactions involving the rendering of services as a common or contract carrier or public utility at rates or charges fixed in conformity with law or governmental regulation;

​

➢

transactions involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; and

​

➢

charitable contributions, grants or endowments by the Company or the Company’s charitable foundation to a charitable or non-profit organization, foundation or university in which a Related Person’s only relationship is as an employee or a director or trustee, if the aggregate amount involved does not exceed the greater of  $1,000,000 or 2% of the recipient’s consolidated gross revenue.

​

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 2021, and there are no such proposed transactions.

Related Person Transactions with EQT

A discussion of related person transactions with EQT is attached on Appendix B to this Proxy Statement.

 

20   Equitrans Midstream Corporation – 2022 Proxy Statement

 

 

 

Stock Ownership Guidelines

The non-employee directors are subject to stock ownership guidelines which require them to hold shares (or share equivalents, including deferred stock units) with a value equal to five times the annual cash retainer. Under the guidelines, directors have up to five years from joining the Board to acquire a sufficient number of shares (or share equivalents, including deferred stock units) to meet the stock ownership guidelines. Each of the Company’s non-employee directors satisfies the stock ownership guidelines or is within the five-year grace period.

Other

➢

All directors are eligible to participate in the Matching Gifts Program of the Equitrans Midstream Foundation on the same terms as Company employees. Under this program, the Equitrans Midstream Foundation will match gifts of at least $100 made by a director to eligible charities, up to an aggregate total of  $50,000 per director in any calendar year.

​

➢

The Company reimburses directors for their travel and related expenses in connection with attending Board and Committee meetings and related activities. The Company also provides non-employee directors with $20,000 of life insurance and $250,000 of travel accident insurance while traveling on business for the Company.

​

(1)

Includes annual cash retainers and committee chair fees, some of which have been deferred at the election of the director.

​

(2)

This column reflects the aggregate grant date fair values determined in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 for the deferred stock units awarded to each director during 2021. On January 1, 2021, the Company granted 18,660 deferred stock units with a grant date fair value of $150,026 to each non-employee director serving at that time. The grant date fair value is computed as the number of deferred stock units awarded on the grant date multiplied by the closing stock price of the Company’s common stock on the business day prior to the grant date, which was $8.04 on December 31, 2020.

​

(3)

This column reflects (i) accrued dividends on Company deferred stock units; (ii) annual premiums paid for life insurance and travel accident insurance policies ($48.74 per director); and (iii) the following matching gifts made to qualifying organizations under the Equitrans Midstream Foundation’s Matching Gifts Program: Ms. Bailey — $26,627; Ms. Barpoulis — $6,000; Mr. Szydlowski — $50,000; and Mr. Vagt — $35,000.

​

 

Equitrans Midstream Corporation – 2022 Proxy Statement   23

 

(1)

Information based on Amendment No. 3 to Schedule 13G filed with the SEC on February 11, 2022 reporting that Capital International Investors has sole voting power over 48,564,874 shares and sole dispositive power over 50,477,217 shares.

​

(2)

Information regarding ownership of shares of common stock is based on Amendment No. 5 to Schedule 13G filed with the SEC on January 27, 2022, reporting that BlackRock, Inc. has sole voting power over 46,290,145 shares and sole dispositive power over 47,381,345 shares.

​

(3)

Information based on Amendment No. 3 to Schedule 13G filed with the SEC on February 10, 2022 reporting that The Vanguard Group has sole dispositive power over 40,950,328 shares, shared voting power over 383,388 shares, and shared dispositive power over 694,363 shares.

​

(4)

Information based on Amendment No. 4 to Schedule 13G filed with the SEC on February 4, 2022 reporting that EQT had sole dispositive power over 22,796,026 shares. In connection with the Separation, EQT and the Company entered into a Shareholder and Registration Rights Agreement, pursuant to which EQT granted to the Company a proxy to vote the shares of Company common stock owned by EQT immediately after the Separation in proportion to the votes cast by the Company’s other shareholders. As a result, EQT does not exercise voting power over any of the shares of Company common stock that it beneficially owns.

​

 

24   Equitrans Midstream Corporation – 2022 Proxy Statement

 

(5)

Information based on Schedule 13G filed with the SEC on February 14, 2022 reporting that T. Rowe Price Associates, Inc. (Price Associates) had sole dispositive power over 21,697,668 shares and sole voting power over 8,478,249 shares. These securities are owned by various individual and institutional investors which Price Associates serves as investment adviser with power to direct investments and/or power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

​

(6)

D. E. Shaw Galvanic Portfolios, L.L.C. holds 6,038,028 Series A Preferred Shares. D. E. Shaw Galvanic Portfolios, L.L.C. has the power to vote or to direct the vote of  (and the power to dispose or direct the disposition of) the Series A Preferred Shares directly owned by it. D. E. Shaw & Co., L.P. (DESCO LP), as the managing member of D. E. Shaw Adviser II, L.L.C. (Adviser II), which in turn is the investment adviser of D. E. Shaw Galvanic Portfolios, L.L.C., may be deemed to have the shared power to vote or direct the vote of  (and the shared power to dispose or direct the disposition of) the Series A Preferred Shares. D. E. Shaw & Co., L.L.C. (DESCO LLC), as the managing member of D. E. Shaw Manager II, L.L.C. (Manager II), as the manager of D. E. Shaw Galvanic Portfolios, L.L.C., may be deemed to have the shared power to vote or direct the vote of  (and the shared power to dispose or direct the disposition of) the Series A Preferred Shares. Julius Gaudio, Maximilian Stone, and Eric Wepsic, or their designees, exercise voting and investment control over the Series A Preferred Shares on DESCO LP’s and DESCO LLC’s behalf. D. E. Shaw & Co., Inc. (DESCO Inc.), as general partner of DESCO LP, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Series A Preferred Shares. D. E. Shaw & Co. II, Inc. (DESCO II Inc.), as managing member of DESCO LLC, may be deemed to have the shared power to vote or direct the vote of  (and the shared power to dispose or direct the disposition of) the Series A Preferred Shares. None of DESCO LP, DESCO LLC, Adviser II, Manager II, DESCO Inc., or DESCO II Inc. owns any shares of the Company directly, and each such entity disclaims beneficial ownership of the Series A Preferred Shares. David E. Shaw does not own any shares of the Company directly. By virtue of David E. Shaw’s position as President and sole shareholder of DESCO Inc., which is the general partner of DESCO LP, and by virtue of David E. Shaw’s position as President and sole shareholder of DESCO II Inc., which is the managing member of DESCO LLC, David E. Shaw may be deemed to have the shared power to vote or direct the vote of  (and the shared power to dispose or direct the disposition of) the Series A Preferred Shares and, therefore, David E. Shaw may be deemed to be the beneficial owner of the Series A Preferred Shares. David E. Shaw disclaims beneficial ownership of the Series A Preferred Shares.

​

(7)

NB Alternatives Advisors LLC has sole voting and dispositive power over all 3,752,308 shares held by NB Burlington Aggregator LP.

​

Equity Ownership of Directors and Executive Officers

The table below provides the number of shares of Company common stock beneficially owned by the Company’s directors and NEOs and all directors and executive officers of the Company as a group as of February 11, 2022, determined under SEC rules, which include Company shares they had the right to acquire within 60 days after February 11, 2022. At the close of business on February 11, 2022, Equitrans Midstream had 434,323,189 shares of common stock 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 beneficially owned by them, subject to community property laws where applicable. None of the shares of Company common stock are subject to a pledge.

 

 

​

*

Indicates ownership or aggregate voting percentage of less than 1%.

​

(1)

This column reflects shares held of record and shares owned through a bank, broker or other nominee, including shares owned through the Company’s 401(k) plan. For the directors, this column includes deferred stock units, including accrued dividends, to be settled in Company common stock, and over which the directors have no voting or investment power prior to settlement, in the following amounts: Ms. Bailey — 84,686 units; Ms. Barpoulis — 51,352 units; Mr. Burke — 84,686 units; Ms. Collawn — 44,083 units; Ms. Dorman — 84,686 units; Mr. Karam — 4,080 units; Mr. Leland — 51,080 units; Mr. Szydlowski — 71,263 units; and Mr. Vagt — 71,263 units. For Ms. Collawn and Mr. Szydlowski, this column also includes 21,089 and 43,310 deferred stock units, including accrued dividends, respectively, that will be settled in common stock in connection with the deferral of director fees, over which Ms. Collawn and Mr. Szydlowski have sole investment but no voting power prior to settlement.

​

(2)

This column reflects for each of the NEOs and directors, as well as all executive officers and directors as a group, the total Company shares beneficially owned as a percentage of the sum of the Company’s outstanding shares at February 11, 2022, and all deferred stock units (including accrued dividends) that will be settled in Company common stock upon termination of the directors’ service.

​

(3)

Shares beneficially owned include (i) 541,000 shares that are held in E.T. Associates, L.P., of which Mr. Karam has sole voting and shared investment power; (ii) 20,000 shares that are held by Mae Rose Partners, LP, of which Mr. Karam shares voting and investment power; and (iii) 25,000 shares that are held by Lakeside Drive Associates, Inc., of which Mr. Karam shares voting and investment power.

​

(4)

Shares beneficially owned include 9,198 shares owned by Ms. Charletta’s husband, of which 77 shares are held in his personal individual retirement account.

​

(5)

Shares beneficially owned include 18,650 shares that are held in a trust of which Mr. Oliver is a co-trustee and in which he shares voting and investment power.

​

Delinquent Section 16(a) Reports

Section 16(a) of the 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 2021 all reporting persons filed the required reports on a timely basis under Section 16(a), except that a late Form 4 was filed for Ms. Collawn on January 6, 2021 in connection with her 2021 phantom unit grant and her deferral of director compensation due to a technical issue with the Company’s filing software.

 

26   Equitrans Midstream Corporation – 2022 Proxy Statement

 

 

Executive Summary

 

28   Equitrans Midstream Corporation – 2022 Proxy Statement

 

This CD&A, the “Narrative Disclosure to Summary Compensation Table” and the “2021 Grants of Plan-Based Awards Table” contain references to 2021 Adjusted EBITDA, 2021 Economic Adjusted EBITDA and Free Cash Flow, financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP), which also are referred to as non-GAAP supplemental financial measures. Attached as Appendix C are reconciliations of 2021 Adjusted EBITDA, 2021 Economic Adjusted EBITDA and Free Cash Flow to 2021 Company net income and net cash provided by operating activities, respectively, the most directly comparable GAAP financial measures, as well as other important disclosures regarding non-GAAP financial measures.

Compensation Philosophy and Practices

In designing the 2021 compensation structure, the Committee utilized the following guidelines as the foundation for the program:

➢

The program should aid in the recruitment and retention of management and key personnel.

​

➢

The program should encourage sound business strategy and execution that leads to long-term and sustainable shareholder value.

​

➢

The program should establish key elements of compensation (base salary, annual short-term incentive and long-term incentive targets) that approximate the 50th percentile of the Company’s Compensation Peer Group’s TDC amounts.

​

➢

The program should ensure all short-term incentives and the majority of long-term incentives are performance-driven based on Company-wide, well-defined metrics and should avoid individual metrics for executives or subjective judgments in determining payments.

​

➢

The program should limit executive perquisites to basic programs that are minimal in amount and number and are consistent with market practices.

​

➢

The program should encourage a culture of integrity, safety and collaboration and seek to emphasize favorable ESG behavior.

​

 

Equitrans Midstream Corporation – 2022 Proxy Statement   29

 

➢

The program should be transparent and take into account the distinct interests of shareholders, stakeholders and employees.

​

➢

The Committee should receive periodic feedback from management to assess the program’s effectiveness in supporting the Company’s business objectives.

​

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.

 

30   Equitrans Midstream Corporation – 2022 Proxy Statement

 

How We Determine Executive Compensation

Our Core Compensation Program is Based on Three Key Elements of Compensation

The Company’s compensation program is based on three key elements of compensation:

➢

base salary

​

➢

annual short-term incentives (ESTIP)

​

➢

long-term incentives (LTIP)

​

Each element is determined with a view toward offering competitive TDC versus similar peer group positions while also providing compensation levels that aid in the retention of high-performing executives. The following table describes each element and outlines the Committee’s objectives in using each element of compensation.

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 elements of the 2021 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) for 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 41 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 – 2022 Proxy Statement   31

 

*

Amounts shown above reflect the core components of our 2021 executive compensation program and do not include the special, one-time, performance-based MVP awards described later in this CD&A.

​

Determination of Target Total Direct Compensation (TDC)

For 2021, the Committee developed the target TDC for our NEOs by establishing base salaries and setting annual and long-term incentive targets which were then recommended to, and approved by, the Board.

When establishing target TDC for each NEO, the Committee considered:

➢

the compensation philosophy and practices articulated above;

​

➢

the market median target compensation elements of the Company’s Compensation Peer Group as developed by the Committee in consultation with its independent compensation consultant;

​

➢

the scope of the executive’s responsibility, internal pay equity, succession planning and industry-specific technical skills and abilities that may be difficult to replace;

​

➢

the CEO’s compensation recommendations (with respect to NEOs other than the CEO); and

​

➢

input from the other independent directors of the Board.

​

In evaluating the amount and type of each component of compensation, the Committee considers the effect of each element on all other elements, as well as the allocation of target TDC between fixed and at-risk pay and cash and equity. The Committee is committed to providing that a significant portion of each NEO’s TDC opportunity take the form of performance-based awards that only pay out upon attainment of performance goals that drive Company results 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 2021, the Compensation Peer Group was composed of the following ten companies that are generally similar to the Company with respect to business activity and at the time of selection were of a similar size as measured by market capitalization, total assets and earnings before interest, taxes, depreciation and amortization (EBITDA):

In consultation with the Committee’s independent compensation consultant, the Committee added National Fuel Gas Company and Plains All American Pipeline, L.P. to the 2021 Compensation Peer Group based on their significant midstream businesses and, with respect to National Gas Fuel Company, its geographic overlay with the Company’s operations and competition for talent in the Appalachian Basin.

 

32   Equitrans Midstream Corporation – 2022 Proxy Statement

 

Determination of Final Total Compensation for Performance-Based Elements

Throughout the year, the Committee reviews performance against the established ESTIP and LTIP program performance metrics. Once the fiscal year has ended, the Committee determines achievement of the performance goals for the ESTIP and, after the completion of the performance period, the applicable LTIP awards, determines the actual amount to be paid under the ESTIP and each PRSU award, as applicable, and recommends such amounts to be paid under the ESTIP and each PRSU award, as applicable, to the Board.

Role of Independent Compensation Consultant

The Committee has the sole authority to hire, terminate and approve fees for compensation consultants, outside legal counsel and other advisors as it deems to be necessary to assist in the fulfillment of its responsibilities. The Committee retained the services of Mercer as its independent compensation consultant to aid the Committee in performing its duties and designing the compensation philosophy and structure for the Company. During 2021, representatives of Mercer provided the Committee with market data and counsel regarding executive officer compensation programs and practices, including specifically:

➢

competitive benchmarking;

​

➢

peer group identification and assessment;

​

➢

advice and market insight as to the form of and performance measures for annual and long-term incentives;

​

➢

marketplace compensation trends in the Company’s industry and generally; and

​

➢

a risk assessment of the Company’s compensation programs.

​

Representatives of Mercer do not make recommendations on, or approve, the amount of compensation for any executive officer. The Committee has affirmatively determined that no conflict of interest has arisen in connection with the work of Mercer as compensation consultant for the Committee.

Shareholder Engagement and Say-on-Pay Results

Shareholders holding more than 98% of our outstanding shares voted at our 2021 annual shareholders’ meeting to approve our say-on-pay proposal regarding our NEOs’ 2020 compensation. Based on these results, the Committee concluded that the compensation programs and practices specifically designed to our Company’s needs have strong shareholder support. Nonetheless, the Committee did undertake a thorough analysis of its compensation programs and made appropriate modifications as described below.

2021 Compensation Program Elements

The following discussion outlines the targeted 2021 executive compensation program and what we actually paid our NEOs in 2021.

 

Equitrans Midstream Corporation – 2022 Proxy Statement   33

 

First, the Committee determined that 60% of our ESTIP should be payable based on the Company’s Economic Adjusted EBITDA, which is generally the sum of our Adjusted EBITDA (defined below) and any Deferred Revenue (defined below). The Committee believes Economic Adjusted EBITDA best reflects the Company’s economic performance as it removes non-recurring, non-operational gains, losses and impairments and eliminates the potential for deferred revenue amounts to lead to either outsized or diminished incentive payments.

Second, for 2021, our Committee recognized the importance investors place on our Company’s ability to generate free cash flow since the closing in June 2020 of the EQM Merger and, accordingly, determined to include free cash flow as a metric to incentivize executives’ performance.

Finally, our Committee also recognized shareholders’ and other stakeholders’ increasing focus on ESG and sustainability matters, particularly in respect of climate change, and the Company’s publication of its Climate Policy in January 2021. Accordingly, our Committee determined to include methane emissions mitigation as a metric to reduce our carbon footprint as the economy transitions to a lower-carbon state, incentivize sustainable business practices and emphasize, including for employees and other stakeholders, the importance placed by the Company on such practices.

In connection with incorporating these metrics as part of the 2021 ESTIP, our Committee decided to remove Controllable Costs and Controllable Erosion and Sediment Rate as elements of the 2021 ESTIP given the Company’s significant progress made in these areas and long-standing nature of Company practices that promote continued focus on these matters, notwithstanding their non-inclusion as ESTIP elements.

 

 

​

(1)

As described above, Economic Adjusted EBITDA is calculated as the sum of Adjusted EBITDA and Deferred Revenue. As provided under the ESTIP, the 2021 Economic Adjusted EBITDA calculation excludes non-recurring, non-operational gains, losses and impairments. See Appendix C for a reconciliation of Economic Adjusted EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.

​

•

Adjusted EBITDA means, as applicable, net income (loss), plus income tax expense (benefit), net interest expense, loss on extinguishment of debt, depreciation, amortization of intangible assets, impairments of long-lived assets, equity method investment, payments on the preferred interest in EQT Energy Supply, LLC (Preferred Interest), non-cash long-term compensation expense  and  less equity income, AFUDC-equity, unrealized gain (loss) on derivative instruments and adjusted EBITDA attributable to noncontrolling interest.

​

•

Deferred Revenue is the difference between the cash received from the contractual minimum volume commitment under the February 2020 Gas Gathering and Compression Agreement with EQT (EQT Global GGA) and the revenue recognized over the 15-year contract term.

​

(2)

Free Cash Flow is calculated as net cash provided by operating activities plus principal payments received on the Preferred Interest and less net cash provided by operating activities attributable to noncontrolling interest, premiums paid on extinguishment of debt, capital expenditures (excluding the noncontrolling interest share (40%) of Eureka Midstream capital expenditures), capital contributions to MVP JV (defined below) and dividends paid to Series A Preferred shareholders. As provided under the ESTIP, the 2021 Results Free Cash Flow excludes specified circumstances or events that occurred during the 2021 plan year. See Appendix C for a reconciliation of Free Cash Flow to net cash provided by operating activities, the most directly comparable GAAP financial measure.

​

(3)

HSE metrics defined as:

​

•

Incidents with Serious Potential (ISP) Rate: Measures events with precursors that can lead to serious injuries and fatalities thereby promoting awareness and allowing prevention of the injuries.

​

•

Adjusted Incidents with Serious Potential Rate: ISP rate is adjusted by the rate of Observations with Serious Potential (OSP). An OSP is an observation of an activity with precursors that has the potential to become an ISP before the event occurs.

​

•

Methane Emission Mitigation: Measures annualized reduction of pneumatic methane emissions, relative to 2019 amounts, excluding MVP and Eureka Midstream.

​

2021 NEO ESTIP Opportunities and Payments

The Board, upon recommendation of the Committee, increased the target percentages for Messrs. Karam’s and Pietrandrea’s respective short-term incentive plan opportunities for the 2021 plan year, to better align the targets with the market median, based on our Compensation Peer Group. The NEOs’ short-term incentive opportunities for 2021 were as follows:

 

Equitrans Midstream Corporation – 2022 Proxy Statement   35

 

Time-Based RSAs

The time-based RSAs issued under the 2021 LTIP program cliff vest after three years of continuous service following the vesting commencement date, which was January 1, 2021. 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 2021 LTIP, 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 retain the Relative TSR metric used in the 2020 program, but decided to return to the three-year performance period structure. Upon review of market data, the Committee believed that the three-year performance period structure was more prevalent among our peer companies. The Committee recommended, and the Board approved, the above modifications for the 2021 long-term performance-based incentive design.

By basing our PRSUs on Relative TSR performance over the 2021-2023 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 (discussed below) and to delivering shareholder value.

The table below summarizes the Relative TSR performance goals and potential payouts:

​

*

TSR performance between points will be determined by straight-line interpolation.

​

Our 2021 TSR Peer Group consists of a subset of similarly-sized C-corporations with market values in excess of  $3 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 2021 TSR Peer Group represents an increase in the number of peer companies from our 2020 peer group, based upon the inclusion of the two companies added to the Compensation Peer Group (as discussed above) and the inclusion of Hess Midstream Partners LP as a result of Committee’s determination to include all of the C-corporations within the Alerian US Midstream Energy Index (AMUS) with market values in excess of  $3 billion for the 2021 TSR Peer Group. The Committee believes this larger peer group (as compared to the Compensation Peer Group) is appropriate as it is designed to serve as a suitable group of peers from which to measure TSR performance.

 

 

​

*

Enable Midstream Partners, LP (Enable Midstream) was acquired in December 2021. In January 2022, the Committee determined to remove Enable Midstream from the TSR Peer Group.

​

To determine Relative TSR we utilize the 15-day average closing price of our stock prior to the beginning of the performance period and the 15-day average closing price of our stock at the end of the performance period.

The target long-term incentive awards to the NEOs were made consistent with the Committee’s methodology described above and the target percentage opportunities were increased for all NEOs from the target long-term incentive awards approved for the NEOs in 2020 as a result of market comparisons with our Compensation Peer Group (other than Mr. Karam, whose target long-term incentive award percentage was decreased in light of market comparison information). The targets and number of RSAs and PRSUs awarded to the NEOs were as follows:

*

Table above reflects the core components of our 2021 executive compensation program and does not include the special, one-time, performance-based MVP awards described below.

​

MVP Performance Awards

In addition to our traditional LTIP, we implemented, following the approval of our Board of Directors upon the recommendation of the Committee, a special, one-time, performance award program designed to reward all employees should our most complex and strategically significant project, our MVP project, be placed in-service. The MVP is an estimated 300-mile, 42-inch diameter natural gas interstate pipeline that will extend from our existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia. Upon completion, MVP would provide access to the growing Southeast demand markets. As such, the MVP project, which we have undertaken through a joint venture (MVP JV) with affiliates of each of NextEra Energy, Inc., Consolidated Edison, Inc., AltaGas Ltd. and RGC Resources, Inc., represents a transformative opportunity for our Company and is expected to create significant shareholder value. Despite unprecedented and continuous opposition over a number of years by industry opponents, including through litigation, involvement in regulatory proceedings and other means, and events affecting the project outside of our control, all of our employees have continued to work steadily and collaboratively, including with federal and state authorities, to realize the value of this unique opportunity for our stakeholders and the regions MVP is to serve. Our Board recognizes and appreciates the magnitude of these ongoing efforts.

 

Equitrans Midstream Corporation – 2022 Proxy Statement   37

 

We granted an MVP award to each of our active employees as of November 1, 2021, including our NEOs. The MVP awards made to our NEOs, as well as certain other senior leaders, were granted in the form of stock-settled Performance Share Units (PSUs) and contain more stringent vesting, service and post-vesting holding requirements than the awards granted to our other program participants. Each PSU represents the right to earn one share of our common stock.

➢

50% vests and is paid on the date selected by the Company that is not later than 90 days after the In-Service Date, but in no event prior to the first anniversary of the grant date;

​

➢

25% vests and is paid on the date selected by the Company that is not later than 30 days after the first anniversary of the In-Service Date; and

​

➢

25% vests and is paid on the date selected by the Company that is not later than 30 days after the second anniversary of the In-Service Date.

​

In addition to the vesting requirements described above, the MVP awards require our NEOs to hold all shares received under the award (excluding shares withheld for taxes) for at least one year following the applicable payment date, further aligning our NEOs’ interests with those of our shareholders. The MVP awards are also subject to the Company’s compensation recoupment policy. For information regarding the treatment of the PSUs upon the termination of an NEO or in connection with a Change of Control, see “Potential Payments Upon Termination or Change of Control” below.

We believe that this one-time award program will help to reward our employees for the achievement of our most significant milestone since the establishment of our Company as an independent, publicly traded entity, which we expect will create significant shareholder value, and promote retention of our employees and executive officers with respect to the potential completion and in-service of the MVP.

2019 PSUP Long-Term Incentive Awards

Our first PRSUs as a standalone company were awarded in 2019 for the 2019-2021 performance period. In February 2022, the Committee certified the performance under the 2019 PSUP, which resulted in no payout based upon the Company’s Relative TSR and Cumulative TSR over the performance period.

Other Considerations Important to Our Compensation Program

In general, our NEOs participate in the same retirement and health and welfare benefit plans offered to other Company employees. The same contribution amounts, deductibles and plan design provisions are generally applicable to all employees.

Stock Ownership Guidelines

The NEOs are subject to stock ownership guidelines requiring each NEO to hold a specified multiple of the NEO’s base salary (five times for the CEO and three times for all other NEOs). The NEOs are required to meet the ownership guidelines within a reasonable period of time from becoming an NEO; provided, however, in the event the individual ownership guidelines are not met within a five-year period, the net shares acquired through incentive compensation plans must be retained. As of December 31, 2021, Mr. Karam and Ms. Charletta met their respective ownership guidelines, as their Company stock holdings represented

 

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approximately 14 and 4 times their base salaries, respectively. Our remaining NEOs are on track to satisfy the guidelines within the prescribed time period.

Retirement Program

Our NEOs participate in the same defined contribution 401(k) plan as all other Company employees. During 2021, we contributed an amount equal to 6% of each participant’s base salary and annual incentive award to an individual account for each employee (subject to Internal Revenue Service (IRS) regulations).

We also match every participant’s elective deferral contributions by an amount equal to 50% of each dollar contributed, subject to a maximum Company matching contribution of 3% of the employee’s base salary and annual incentive awards (subject to IRS regulations).

We do not provide separate executive retirement benefits for our NEOs.

Health Benefits

Our NEOs participate in the same health and welfare benefit plans as all other Company employees. We provide medical, prescription drug, dental, vision, short- and long-term disability, wellness and employee assistance programs. We also provide our NEOs and certain other senior members of management with access to an annual executive physical and modest additional life / accidental death & dismemberment insurance coverage reflecting their compensation levels. NEOs pay the same health benefit contribution amounts and have the same deductibles as applicable to all other Company employees.

Limited Perquisites

The perquisites program provides an executive physical and access to a concierge medical program as well as an annual stipend to offset the cost of financial planning services. During 2021, Mr. Karam also was reimbursed for the costs of his 2021 monthly dues for his club membership. The Company reflected the entire cost of the monthly dues for the membership in the Summary Compensation Table below. However, Mr. Karam’s use of the club is primarily for businesses purposes, and the Company therefore believes that only a portion of the cost represents a perquisite. See footnote (3) to the Summary Compensation Table below for a discussion of the perquisites provided to the NEOs during 2021. No tax gross-ups were provided on perquisites for our NEOs.

Compensation Policies and Practices and Risk Management

In early 2022, members of the Company’s management, with the assistance of the Committee’s independent compensation consultant, reviewed the risk assessment of the Company’s compensation programs for all employees. The results of such assessment were presented to the Committee. Based on the assessment, the Company and the Committee believe that the Company’s compensation programs are appropriate and do not create risks reasonably likely to have a material adverse impact on the Company.

Agreements with the Named Executive Officers

The Committee believes that severance protections play a valuable role in attracting, motivating and retaining highly talented executives. Accordingly, we provide such protections for the NEOs under their agreements 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.

 

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