EQT’s Governance Structure
EQT’s board of directors is the highest governance body at the company and is responsible for overseeing the management of EQT’s business. Our board leadership philosophy is outlined in paragraph 5(g) of our Corporate Governance Guidelines. EQT completed the separation of our upstream and midstream businesses on November 12, 2018, with the spinoff of the standalone midstream company, Equitrans Midstream Corporation (NYSE: ETRN) (the spin-off). On July 10, 2019, Toby Z. Rice was named EQT’s president and CEO, and John F. McCartney was elected chairman of the board of directors.
As of November 2019, EQT has four standing board committees:
- Management Development and Compensation
- Corporate Governance
- Public Policy and Corporate Responsibility
The Corporate Governance Committee identifies and recommends requisite skills and characteristics for individuals to serve as directors. The committee identifies potential director candidates through many sources, including third-party search firms and unsolicited shareholder submissions. All EQT Directors annually stand for election by shareholders. For additional information on board member qualifications, please see the board of directors page on EQT’s website. For more information on EQT’s nomination and selection process, see pages 36-39 of EQT’s 2019 Proxy Statement.
Upon selection, EQT Directors participate in an initial orientation to board service and routinely receive information from management to inform them about company business, including related economic, environmental and social topics. EQT encourages directors to participate in outside educational programs, for which EQT funds or reimburses participation.
EQT discloses conflicts of interest to stakeholders as required by law. EQT’s Code of Business Conduct and Ethics outlines our policy to avoid conflicts of interest (we also have an internal Conflicts of Interest Policy). EQT maintains a majority of independent directors and our Corporate Governance Committee monitors related-person transactions. For more information, see pages 40-42 of EQT’s 2019 Proxy Statement.
The board and its committees use performance assessments to evaluate how well they are fulfilling their governance responsibilities. The board and its committees conduct annual self-assessments and each director — in a discussion with the chairman of the board — provides feedback on individual director performance. Although the board does not publicly disclose any actions taken in response to its annual self-assessments, it takes the assessment process seriously and responds appropriately to the results to improve overall governance performance.
Board of Directors Composition and Diversity
†Minority population includes: American Indian/Alaska Native, Asian, Black/African American, Hispanic or Latino or any employee disclosing two or more races.
Sustainability and Risk Management
In addition to general oversight of EQT’s business and affairs, the board also performs certain specific functions, set forth in paragraph two of our Corporate Governance Guidelines. These include:
- Oversight of succession planning for the CEO and other key officers
- Review, approval and monitoring of fundamental financial and business strategies and major corporate actions
- Reviewing the process for assessing major risks facing the company and options for mitigation
- Confirming that processes in place are reasonably designed to maintain the integrity of the company’s financial statements, promote compliance with laws and regulations applicable to the company and its directors, officers and employees, and sustain good relationships with customers, suppliers and other stakeholders
The board oversees and evaluates the process for assessing the major risks facing EQT and the related risk mitigation options. These responsibilities include:
- Performing an annual review of the company’s major risks
- Addressing major risks with management via presentations throughout the year (initiated by management or requested by the board)
- Delegating oversight for certain risks to the board committees
Additionally, the Audit Committee of the board reviews the company’s major risk exposures and key processes implemented to monitor and control such exposures. When making decisions on behalf of EQT, the board considers the feedback provided by its respective stakeholders.
The assessment and management of environmental, safety and social impacts, risks and opportunities is embedded within EQT’s day-to-day operations and is the responsibility of all EQT employees. The board of directors has broad oversight of the company’s sustainability efforts, and regularly receives reports from senior management regarding sustainability. In addition, the board has delegated, to certain committees, specific oversight of topics that fall within the scope of that committee’s charter. For example, the Public Policy and Corporate Responsibility Committee is charged with providing oversight for a variety of topics, including (but not limited to) matters of public policy and the company’s safety and environmental performance. For more information about the board’s role in risk oversight, see pages 35-36 of EQT’s 2019 Proxy Statement.
EQT’s board delegates authority for select economic, environmental and social topics to the CEO, who reports directly to the board. The CEO delegates some of these authorities to senior management based upon their established roles and responsibilities within the company. These senior managers report to the CEO and often present updates to the board regarding the economic, environmental and social risks and opportunities facing the company. Management, in collaboration with the board, also reviews the company’s performance in managing the impacts of these activities.
2018 Board Meetings
At committee meetings, the board reviews, economic, environmental and social impacts, risks and opportunities facing EQT, as warranted.
|Management Development and Compensation Committee|
|Corporate Governance Committee|
|Public Policy and Corporate Responsibility Committee|
|Operating and Capital Efficiency Committee|
The Vice President of Communications at EQT Corporation is accountable for compiling and verifying the information set forth in the company’s corporate social responsibility report.
Communicating with the Board
To achieve sustainable performance for shareholders, employees, landowners, customers and communities, the board is committed to overseeing EQT with integrity, accountability and transparency. The board welcomes input on how it is doing and provides stakeholders multiple ways to communicate with EQT’s governing body.
The chairman of the board is a key point of contact within the board for concerns or inquiries. Other avenues for contacting the EQT board include:
- Corporate Secretary, investor relations, the executive team and respective websites
- The EQT Compliance Hotline
- Traditional written correspondence
Communications may be made anonymously or confidentially.
While EQT does not have systems in place to track the concerns communicated to the board of directors, EQT has conducted a formal shareholder engagement program since 2010, and we maintain active dialogue with our shareholders year-round. Through our investor relations program, senior executives hold meetings with EQT investors or potential investors to discuss operations, strategy and other critical items as outlined on pages 5-6 of EQT’s 2019 Proxy Statement. In 2018, we held more than 460 meetings with EQT investors. Executives from the Compensation and Governance functions also meet with interested shareholders to discuss the company’s pay structure and governance with time devoted to answering shareholder questions and taking suggestions for changes. Our management team uses the annual corporate social responsibility report to help guide conversations with investors regarding economic, environmental and social topics. When investors pose specific questions, the team schedules calls and/or meetings to address their inquiries accordingly.
As described in Stakeholder Engagement, the board values and regularly considers the input and feedback of all stakeholders in its oversight of the company’s sustainability efforts.
Director and Executive Compensation
EQT independent director compensation — including descriptions of cash, equity-based and other compensation — as well as related processes, are outlined on pages 43-46 of EQT’s 2019 Proxy Statement. Annually, the Corporate Governance Committee reviews and the EQT board approves the compensation.
The Management Development and Compensation Committee of the EQT board establishes the target total direct compensation for executive officers by establishing base salaries, setting long-term and annual incentive targets, and approving perquisites. The committee approves annual and long-term incentive programs on a yearly basis with recommendations from management and an independent compensation consultant. For more information regarding our executive compensation process, see pages 32-34 of EQT’s 2019 Proxy Statement; additionally, pages 51-113 describe the executive compensation program and performance.
EQT has a compensation recoupment or “clawback” policy applicable to executive officers if the company is required to prepare an accounting restatement due to material noncompliance with any financial reporting mandate under U.S. securities law. The policy authorizes the company to recoup certain compensation from covered executives who received equity or non-equity incentive compensation.
This year marked the ninth consecutive year of shareholder outreach efforts targeting the company’s compensation and governance practices. The results of these meetings are reviewed with the CEO, Corporate Governance Committee and the Management Development and Compensation Committee. In 2018, we requested governance and compensation targeted meetings with investors representing approximately 58% of our outstanding shares, met with holders of 16.5% of our outstanding shares, and were told by holders representing another 10% that meetings were unnecessary, as they were content with our practices. In response to the feedback recorded in these meetings, EQT:
- Prohibited pledging of EQT securities by executive officers and directors
- Established a compensation recoupment policy
- Enhanced disclosure of our short-term incentive plan design
- Clarified that our acquisition of Rice Energy would not increase long-term incentive compensation
- Modified the operational metric set forth in the long-term incentive plan design
- Began, in November 2018, a board refreshment effort continued in 2019
- Developed our proxy access bylaw
- Declassified the EQT board of directors
- Adopted a majority voting standard for the election of EQT Directors
The Management Development and Compensation Committee also considers investor feedback during the design of our long-term incentive programs.
|Say-on-pay voting results||2015||2016||2017||2018||2019*|
|% "for" proposal||98.6%||96.1%||98.3%||95.9%||72%|