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

SCHEDULE 14A

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

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

Equitrans Midstream Corporation

(Name of Registrant as Specified In Its Charter)

 

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March 8, 2021

Fellow Shareholders,

On behalf of the Board of Directors and management of Equitrans Midstream Corporation, I am pleased to invite you to participate in our third annual meeting of shareholders on Tuesday, April 27, 2021, at 9:00 a.m. (ET), to be held virtually via live webcast at www.virtualshareholdermeeting.com/ETRN2021. 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 2020 (the say-on-pay vote), approval of amendments to our Articles of Incorporation and Bylaws to remove the supermajority voting requirements, and ratification of the appointment of our independent registered public accounting firm for 2021. 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.

We move the energy that keeps America moving and our mission is simple — to provide safe, reliable, 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:

Work diligently to create value for our shareholders

Provide an engaging workplace for our employees

Preserve and protect the environment

Support the communities where we live and work

I look forward to reporting on our progress and many successes during the annual meeting, including efforts to enhance our Environmental, Social, and Governance platform; and the publication of our first annual Corporate Sustainability Report, produced in accordance with the Global Reporting Initiative and the Sustainability Accounting Standards Board Oil & Gas — Midstream Standards. Thank you for your investment in Equitrans Midstream Corporation and your participation in our annual meeting of shareholders.

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Thomas F. Karam

Chairman and Chief Executive Officer

   

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Notice of Annual Meeting of Shareholders
To Be Held April 27, 2021

WHEN:    The annual meeting of shareholders of Equitrans Midstream Corporation (the Company or Equitrans Midstream) will be held on Tuesday, April 27, 2021, at 9:00 a.m. (Eastern Time) virtually via live webcast at www.virtualshareholdermeeting.com/ETRN2021.

RECORD DATE:    Our Board of Directors has established the close of business on February 19, 2021 as the record date for determining shareholders entitled to receive notice of, and to vote at, the annual meeting and any adjournment or postponement of the meeting.

ITEMS OF BUSINESS:    The following matters will be voted on at the meeting:

Election of nine directors, each for a one-year term expiring at the 2022 annual meeting of shareholders;

Approval, on an advisory basis, of the compensation of Equitrans Midstream's named executive officers for 2020;

Approval of amendments to Equitrans Midstream's Articles of Incorporation and Bylaws to remove the supermajority voting requirements;

Ratification of the appointment of Ernst & Young LLP as Equitrans Midstream's independent registered public accounting firm for 2021; and

Such other business that may properly come before the meeting or any adjournment or postponement of the meeting.

VOTING:    Please consider the issues presented in the attached proxy statement and vote your shares as soon as possible by following the voting instructions included in the proxy statement.

PARTICIPATING IN THE MEETING:    Due to the ongoing public health considerations associated with the coronavirus disease 2019 (COVID-19), we will be holding our 2021 annual meeting of shareholders solely via webcast. You will be able to participate in the meeting online, vote your shares electronically and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/ETRN2021. To participate in the meeting, you will need the 16-digit control number on your notice of Internet availability of proxy materials, your voting instruction form or your proxy card. If you plan to participate in the meeting, please follow the instructions under "Additional Information — Participating in the Annual Meeting" on page 62 of the proxy statement.

On behalf of the Board of Directors,

LOGO

Tobin M. Nelson

Deputy General Counsel & Corporate Secretary

March 8, 2021

Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to Be Held April 27, 2021:

This notice and proxy statement and our annual report on Form 10-K for the year ended
December 31, 2020 are also available online at http://www.proxyvote.com.


 


We commenced providing our proxy materials, or a notice of Internet availability providing access to such materials, on or about March 15, 2021.


TABLE OF CONTENTS

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

18

Compensation Committee Interlocks and Insider Participation

20

Directors' Compensation


21

Equity-Based Compensation

21

Deferred Compensation

21

Stock Ownership Guidelines

22

Other

22

2020 Directors' Compensation Table

22

Equity Ownership


23

Stock Ownership of Significant Shareholders

23

Equity Ownership of Directors and Executive Officers

24

Delinquent Section 16(a) Reports

25

Executive Compensation Information


26

Compensation Discussion and Analysis


26

Our 2020 Named Executive Officers

26

Executive Summary

27

Compensation Philosophy and Practices

28

How We Determine Executive Compensation

30

2020 Compensation Program Elements

32

Other Considerations Important to Our Compensation Program

37

Report of the Management Development and Compensation Committee

38

Executive Compensation Tables


38

Summary Compensation Table

39

2020 Grants of Plan-Based Awards Table

40

Narrative Disclosure to Summary Compensation Table and 2020 Grants of Plan-Based Awards Table

41

Outstanding Equity Awards at Fiscal Year-End

42

Option Exercises and Stock Vested

44

Potential Payments Upon Termination or Change of Control

44

Pay Ratio Disclosure


50

Employee, Officer and Director Hedging


51

Item No. 2 – Advisory Vote on the Compensation of the Company's Named Executive Officers for 2020 (Say-On-Pay)


52

Item No. 3 – Approval of Amendments to Equitrans Midstream's Articles of Incorporation and Bylaws to Remove the Supermajority Voting Requirements


53

Report of the Audit Committee


54

Item No. 4 – Ratification of Appointment of Independent Registered Public Accounting Firm


56

Securities Authorized for Issuance Under Equity Compensation Plans


58

Equitrans Midstream Corporation Directors' Deferred Compensation Plan

58

Additional Information


59

Proposals, Board Recommendations, Vote Required, and Broker Non-Votes

59

Corporate Secretary Contact Information

59

Notice of Internet Availability of Proxy Materials

60

Voting Instructions

60

Participating in the Annual Meeting

62

Other Matters

63

Appendices


A-1

Appendix A – Related Person Transactions with EQT

A-1

Appendix B – Non-GAAP Financial Information

B-1

Appendix C – Proposed Amendments to Amended and Restated Articles of Incorporation of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements

C-1

Appendix D – Proposed Amendments to Second Amended and Restated Bylaws of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements

D-1

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PROXY STATEMENT SUMMARY


OUR COMPANY

Equitrans Midstream Corporation is one of the largest natural gas gatherers in the United States, with a premier asset footprint in the Appalachian Basin. Our Annual Report on Form 10-K for the year ended December 31, 2020 describes our company and the assets and liabilities that comprise our business.

WE EXECUTED ON THE FINAL STEP OF OUR SIMPLIFICATION STRATEGY
AND SIGNED A LONG-TERM GATHERING AGREEMENT WITH OUR
LARGEST CUSTOMER


This summary highlights information about Equitrans Midstream Corporation and the upcoming 2021 annual meeting of shareholders. This summary does not contain all the information you should consider. You should read the entire proxy statement before you vote. We sometimes refer to Equitrans Midstream Corporation in this proxy summary and proxy statement as Equitrans Midstream, the Company, we, or us.

    In June 2020, we executed on the final step of our simplification strategy when we acquired all of the outstanding public common units of EQM Midstream Partners, LP (EQM), our former publicly traded master limited partnership, in a share-for-unit transaction in which each outstanding EQM common unit was exchanged for 2.44 shares of Company common stock (the EQM Merger). In connection with the EQM Merger, EQM redeemed $600 million aggregate principal amount of EQM's outstanding Series A Perpetual Convertible Preferred Units (EQM Series A Preferred Units), and the Company issued newly created Equitrans Midstream preferred stock (Series A Preferred Shares) for the remaining portion of the outstanding EQM Series A Preferred Units. Contemporaneously with the announcement of the EQM Merger in February 2020, the Company also announced (i) a new 15-year global gas gathering agreement with EQT Corporation (EQT), the largest natural gas producer in the United States, based on average daily sales volumes, and the Company's largest customer, providing for 3.0 Bcf per day of initial minimum volume commitments (MVCs) with gradual step-ups to 4.0 Bcf per day following the full in-service date of the Mountain Valley Pipeline (MVP), as well as the dedication of a substantial majority of EQT's core acreage in the prolific Marcellus Shale play in Pennsylvania and West Virginia (the EQT Global GGA), and (ii) two share purchase agreements with EQT pursuant to which the Company repurchased and retired 25,299,752 shares of its common stock, which at the time represented approximately 10% of the Company's outstanding common stock. A graphical depiction of the Company's key strategic transactions since its separation from EQT in November 2018 that culminated in the EQM Merger and a single, pure-play midstream, public corporation is below:

    GRAPHIC

Equitrans Midstream Corporation - 2021 Proxy Statement     i


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ANNUAL MEETING

  Time and Date:   9:00 a.m. (Eastern Time) on Tuesday, April 27, 2021

 

Place:

 

Online at www.virtualshareholdermeeting.com/ETRN2021

 

Record Date:

 

February 19, 2021

 

Participation:

 

You are entitled to participate in the virtual annual meeting if you were an Equitrans Midstream shareholder as of the close of business on the record date. See "Additional Information — Participating in the Annual Meeting" on page 62 of this proxy statement for additional information and instructions.

VIRTUAL ANNUAL MEETING

Due to the ongoing public health considerations associated with COVID-19, and because the health, safety and well-being of our employees and shareholders is of utmost importance to us, we will be holding our 2021 annual meeting of shareholders solely via webcast. We remain sensitive to concerns regarding virtual meetings generally from investor advisory groups and other shareholder rights advocates that have voiced concerns that virtual meetings may diminish shareholder voice or reduce accountability. Accordingly, we have designed the procedures for our virtual meeting format to enhance, rather than constrain, shareholder access, participation and communication, allowing a shareholder to participate fully and equally from any location at no cost to the shareholder. For example, the online format allows shareholders to communicate with us during the meeting so they can ask appropriate questions of our Board of Directors or management in accordance with the rules of conduct for the meeting and allow shareholders to vote electronically. See "Participating in the Annual Meeting" for additional information.


MATTERS TO BE VOTED UPON

   
  Board Voting
Recommendation

  Page for More
Information


 

 

 

 

 

 
 

Item No. 1: Election of nine directors, each for a one-year term expiring at the 2022 annual meeting of shareholders

  FOR
EACH NOMINEE
  1
 

Item No. 2: Approval, on an advisory basis, of the compensation of Equitrans Midstream's named executive officers for 2020 (Say-on-Pay)

 

FOR

 

52

 

Item No. 3: Approval of Amendments to Equitrans Midstream's Articles of Incorporation and Bylaws to Remove the Supermajority Voting Requirements

 

FOR

 

53

 

Item No. 4: Ratification of the appointment of Ernst & Young LLP as Equitrans Midstream's independent registered public accounting firm for 2021

 

FOR

 

56

ii    Equitrans Midstream Corporation - 2021 Proxy Statement


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BOARD AND BOARD COMMITTEES

   
   
   
   
  Equitrans Midstream Board
Committee Membership
  Name, Principal Occupation &
Current Other Public Company Board Service

   
  Director
Since

   
  Age
  Independent
  AC
  CGC
  MDCC
  HSSE
  Vicky A. Bailey   68   2018   GRAPHIC       GRAPHIC       GRAPHIC
  President, Anderson Stratton International, LLC & Vice President, BHMM Energy Services, LLC                   Chair        

 

Current Other Public Company Boards:
Cheniere Energy, Inc., PNM Resources, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Sarah M. Barpoulis   55   2020   GRAPHIC       GRAPHIC       GRAPHIC
  President, Interim Energy Solutions, LLC                            

 

Current Other Public Company Boards:
South Jersey Industries, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Kenneth M. Burke   71   2018   GRAPHIC   GRAPHIC   GRAPHIC        
  Retired Partner, Ernst & Young LLP               Chair            

 

Current Other Public Company Boards:
None

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Patricia K. Collawn   62   2020   GRAPHIC           GRAPHIC   GRAPHIC
  Chairman, President and Chief Executive Officer, PNM Resources, Inc.                            

 

Current Other Public Company Boards:
PNM Resources, Inc., CTS Corporation*

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Margaret K. Dorman   57   2018   GRAPHIC       GRAPHIC   GRAPHIC    
  Retired Executive Vice President, Chief Financial Officer and Treasurer, Smith International, Inc.                       Chair    

 

Current Other Public Company Boards:
Range Resources Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Thomas F. Karam (Chairman)   62   2018                    
  Chairman and Chief Executive Officer, Equitrans Midstream Corporation                            

 

Current Other Public Company Boards:
None

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  D. Mark Leland   59   2020   GRAPHIC   GRAPHIC       GRAPHIC    
  Retired Interim Chief Executive Officer, Deltic Timber Corporation and former Executive Vice President and Chief Financial Officer, El Paso Corporation                            

 

Current Other Public Company Boards:
PotlatchDeltic Corporation, Altus Midstream Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Norman J. Szydlowski   69   2018   GRAPHIC           GRAPHIC   GRAPHIC
  Retired President and Chief Executive Officer, SemGroup Corporation                           Chair

 

Current Other Public Company Boards:
None

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Robert F. Vagt (Lead Independent Director)   73   2018   GRAPHIC   GRAPHIC            
  Retired President, The Heinz Endowments                            

 

Current Other Public Company Boards:
Kinder Morgan, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  AC   Audit Committee   MDCC   Management Development and Compensation Committee
  CGC   Corporate Governance Committee   HSSE   Health, Safety, Security and Environmental Committee
*
Ms. Collawn has indicated that she will not stand for re-election to the board of directors of CTS Corporation at its 2021 annual meeting of shareholders in the second quarter of 2021. Additionally, Ms. Collawn will step down as Chairman, President and Chief Executive Officer of PNM Resources, Inc. (PNM) upon the closing of PNM's merger combination with Avangrid, Inc., which PNM expects to close in the second half of 2021.

Equitrans Midstream Corporation - 2021 Proxy Statement     iii


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GOVERNANCE HIGHLIGHTS

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BUSINESS HIGHLIGHTS

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While the COVID-19 outbreak has significantly impacted the manner in which our employees and contractors perform their job functions, the outbreak has had, and continues to have, a minimal impact on our overall operations. As a midstream energy company, during applicable state-issued stay-at-home orders, we have been recognized as an essential business under various regulations related to the COVID-19 outbreak and continued to operate as permitted under these regulations. We have proactively undertaken a number of companywide measures intended to promote the safety of field and office-based employees and contractors. These measures include, among other things, establishing an Infectious Disease Response Team, instituting enhanced self-protection and office sanitation measures, eliminating non-essential business travel, implementing a mandatory work-from-home protocol for a substantial majority of our employees through at least June 1, 2021, instituting face covering protocols, providing certain medical benefit enhancements, practicing social distancing in the field where possible, sharing our infectious disease response plan with suppliers and contractors, and timely communicating updates to employees and other relevant parties. In addition, we have implemented additional mitigation efforts in connection with the remobilization of certain field level employees and contractors. Our Infectious Disease Response Team continues to monitor and assist in implementing mitigation efforts in respect of potential areas of risk for us and our stakeholders. Additionally, we have provided support to local communities through corporate giving and the Equitrans Midstream Foundation. We have been able to maintain a consistent level of effectiveness through the measures taken.

iv    Equitrans Midstream Corporation - 2021 Proxy Statement


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COMPENSATION HIGHLIGHTS

The Management Development and Compensation Committee (Compensation Committee) of the Company's Board of Directors adopted a compensation philosophy and developed programs and practices that seek to (i) align total direct compensation for our named executive officers (NEOs) using market comparables and other relevant factors; and (ii) deliver transparency and fairness to shareholders, employees and other stakeholders while encouraging sound business strategy and execution that leads to long-term and sustainable shareholder value. At our 2020 annual meeting, our say-on-pay proposal received support from over 97% of our shares voted, leading the Compensation Committee to believe our compensation programs and practices have strong shareholder support. The primary components of our 2020 compensation program were:

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The compensation program is designed to provide an appropriate mix of fixed and variable pay to encourage retention and corporate sustainability to increase long-term and sustainable shareholder value. The program is weighted towards variable pay that requires the Company to achieve well defined performance metrics in order for NEOs to realize performance-based annual and long-term incentives. The charts below reflect the fixed and at-risk components of the 2020 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) our other NEOs. The amounts for each component of total direct compensation (TDC) set forth in the charts below were calculated in accordance with Securities and Exchange Commission (SEC) rules. TDC, which is not a substitute for the total compensation as reported in the Summary Compensation Table on page 39 of this proxy statement, omits certain other compensation (e.g., 401(k) contributions and perquisites) that is reflected in the Summary Compensation Table. For additional information, including information regarding how total compensation is calculated under SEC rules, see the footnotes accompanying the Summary Compensation Table.

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Equitrans Midstream Corporation - 2021 Proxy Statement     v


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IMPORTANT DATES FOR 2022 ANNUAL MEETING OF SHAREHOLDERS

Shareholder proposals submitted for inclusion in Equitrans Midstream's 2022 proxy statement under SEC rules must be submitted in writing and received by Equitrans Midstream's Corporate Secretary on or before November 15, 2021.
 
Under Equitrans Midstream's Second 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 2022 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 28, 2021, and no later than the close of business on January 27, 2022.
 
Under Equitrans Midstream's proxy access Bylaws provision, a shareholder, or group of twenty or fewer shareholders, owning continuously for at least three years, 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 16, 2021 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting) and no later than the close of business on November 15, 2021 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting).
 

For additional information, see "Additional Information – Shareholder Proposals and Director Nominations" on page 63 of this proxy statement.

vi    Equitrans Midstream Corporation - 2021 Proxy Statement


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ITEM NO. 1    –    ELECTION OF DIRECTORS

The Board of Directors recommends a vote FOR each nominee for the Board of Directors.

Our Board of Directors, sometimes referred to in this proxy statement as the Board or our Board, is presenting nine nominees for election as directors at our annual meeting. All nominees currently serve on our Board of Directors and their current terms will expire at the 2021 annual meeting. Mses. Vicky A. Bailey, Sarah M. Barpoulis, Patricia K. Collawn, and Margaret K. Dorman, and Messrs. Kenneth M. Burke, Thomas F. Karam, D. Mark Leland, Norman J. Szydlowski, and Robert F. Vagt, have been nominated to serve for a term of one year to expire at the 2022 annual meeting, or until their earlier removal or resignation or a successor is duly elected and qualified. Each nominee consents to being named in this proxy statement and to serve if elected. The Board has no reason to believe that any nominee will be unavailable or unable to serve. If any nominee is unable to stand for election for any reason, then the shares represented at our annual meeting will be voted by the persons named as proxies for substitute nominees proposed by the Board, unless the Board decides to reduce its size.

The Board, following the recommendation of the Corporate Governance Committee, selected our nine nominees based on a review of the attributes discussed on page 14 under "Corporate Governance and Board Matters    –    Director Nominations." Our Board believes that the nominees, individually and as a whole, possess qualifications consistent with our desired attributes and will provide management with strong independent oversight as we implement our strategic objectives. The following chart provides an overview of the attributes represented on our Board of Directors, in addition to each director's competencies included in the director profiles on the following pages.

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Each of our director nominees brings a unique skillset to the Board of Directors. Notably, all nine of our director nominees:

are experienced in Energy, Regulatory, Utility and/or Government;

have experience in the fields of finance, accounting and/or audit and control; and

have prior experience on the boards of other publicly traded companies.

Equitrans Midstream Corporation - 2021 Proxy Statement     1


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Our director nominees are also experienced in the following areas:

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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.

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2    Equitrans Midstream Corporation - 2021 Proxy Statement


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Director Nominees

Vicky A. Bailey Age 68 Director since November 2018

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Ms. Bailey has served as President, Anderson Stratton International, LLC (strategic consulting and government relations), since November 2005; and Vice President, BHMM Energy Services, LLC (utility and facilities management services), since January 2006. Ms. Bailey has been a director of Cheniere Energy, Inc. (an energy company primarily engaged in liquefied natural gas related businesses) since March 2006 where she serves as a member of the Audit and Governance and Nominating Committees and a director of PNM Resources, Inc. (an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas) (PNM) since January 2019 where she serves as a member of the Audit and Ethics Committee and Chair of the Nominating and Governance Committee. She was a director of EQT Corporation from June 2004 until November 12, 2018, when EQT spun out Equitrans Midstream into a separate publicly traded company (the Separation), and of Cleco Corporation (an energy services company with regulated utility and wholesale energy businesses) from June 2013 through March 2016.

Qualifications: Ms. Bailey has substantial regulatory and senior management experience in the energy industry, having previously served as a commissioner of the Federal Energy Regulatory Commission, President of PSI Energy, Inc. (a regulated utility) and commissioner of the Indiana Utility Regulatory Commission. These experiences enable her to provide valuable insights into issues facing the Company's regulated transmission business, particularly with respect to interacting with regulatory agencies. In addition, Ms. Bailey provides leadership to the Board with respect to energy policy issues, owing to her previous experience as Assistant Secretary for the Office of Policy and International Affairs at the Department of Energy. Ms. Bailey also draws upon public company board experience in supporting the Company's strategic efforts.

Ms. Bailey is Chair of the Corporate Governance Committee and a member of the Health, Safety, Security and Environmental (HSSE) Committee.

     
Sarah M. Barpoulis Age 55 Director since February 2020

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Ms. Barpoulis is the founder and President of Interim Energy Solutions, LLC (an advisory service firm providing asset management and risk management consulting, and litigation support services to the energy sector) since 2003. She has served as a director of South Jersey Industries, Inc. (a publicly traded energy services holding company) since April 2012 where she serves as a member of the Audit Committee (serving as Chair since 2017), the Executive Committee, the Strategy and Finance Committee and the Compensation Committee. She previously served as a director of SemGroup Corporation (a publicly traded provider of gathering, transmission, storage, distribution, marketing and other midstream services) (SemGroup) from October 2009 through the sale of SemGroup to Energy Transfer, LP in December 2019.

Qualifications:Ms. Barpoulis brings nearly 30 years of experience in the energy industry, significant executive-level leadership experience as well as valuable risk management, business planning and commercial expertise through her work as an energy advisor and consultant through Interim Energy Solutions, LLC and her varied roles of increasing responsibility over more than a decade with PG&E National Energy Group, a company that, among other things, developed, built, owned and operated electric generating and natural gas pipeline facilities. Ms. Barpoulis also brings significant public company board experience from her service on the boards of directors of a number of public companies. Ms. Barpoulis is a National Association of Corporate Directors Board Leadership Fellow, demonstrating her commitment to the highest standards of board leadership.

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



   

Equitrans Midstream Corporation - 2021 Proxy Statement     3


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Kenneth M. Burke Age 71 Director since November 2018

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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 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. 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.

     
Patricia K. Collawn Age 62 Director since April 2020

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Ms. Collawn has served as President and Chief Executive Officer of PNM since 2010. She has also served as a director of PNM since 2010 and was appointed Chairman of its board of directors in 2012. Ms. Collawn joined PNM in 2007 and served as President and Chief Operating Officer and President, Utilities of PNM prior to her promotion to President and Chief Executive Officer in 2010. In addition to serving on the board of directors of PNM, Ms. Collawn has served as an independent director of CTS Corporation (a publicly traded designer and manufacturer of sensors, actuators and electronic components for various industries) since 2003, most recently serving as the Chair of the Compensation Committee and a member of the Nominating and Governance Committee. Ms. Collawn has indicated that she will not stand for re-election to the board of directors of CTS Corporation at its 2021 annual meeting of shareholders in the second quarter of 2021. Additionally, Ms. Collawn will step down as Chairman, President and Chief Executive Officer of PNM upon the closing of PNM's merger combination with Avangrid, Inc., which PNM expects to close in the second half of 2021.

Qualifications: As a senior executive in the power utilities sector for more than 25 years, Ms. Collawn has an in-depth understanding of the complex regulatory structure of the utility industry, as well as substantial operations experience, having also served as President and Chief Executive Officer of Public Service Company of Colorado, an Xcel Energy, Inc. subsidiary. Additionally, she previously served as chairman of the Electric Power Research Institute (an independent, non-profit center for public interest energy and environmental research, including sustainability and carbon reduction matters), as well as the first female chairman of the board of directors of the Edison Electric Institute (a national association of investor-owned electric companies). Along with her executive leadership experience and a focus on corporate governance, cybersecurity, and environmental and sustainability matters, Ms. Collawn brings both commercial and operational expertise through her work in the public utility sector.

Ms. Collawn is a member of the Compensation Committee and the HSSE Committee.



   

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Margaret K. Dorman Age 57 Director since November 2018

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Ms. Dorman served as Chief Financial Officer and Treasurer of Smith International, Inc. (a publicly traded supplier of oil and gas products and services) (now part of Schlumberger Limited), between May 1999 and October 2009. Ms. Dorman has served as a director and member of the Audit Committee and Governance and Nominating Committee of Range Resources Corporation (a publicly traded petroleum and natural gas exploration and production company) since July 2019. Ms. Dorman has also been a director of Rubicon Oilfield International (a privately-held provider of oilfield products and technologies) since August 2018, where she serves as Chair of the Audit Committee and a member of the Compensation Committee. She also served as a director of EQT Corporation from January 2012 until the Separation.

Qualifications: Ms. Dorman brings to Equitrans Midstream a wealth of financial expertise and experience in the energy industry, having served in numerous financial positions with Smith International, Inc., including as the Chief Financial Officer for more than a decade, during a period of expansive growth. Previously, Ms. Dorman held management positions with Landmark Graphics, prior to its acquisition by Halliburton Corporation, and EY. She has experience directing financial accounting functions, building banking relationships, structuring debt and equity financings, integrating acquisitions and interacting with shareholders as the lead investor relations executive. Ms. Dorman also has other board and audit committee experience, having served as a director of EQT as well as Hanover Compressor Company (a full service natural gas compression business) (now part of Exterran Holdings, Inc.) from February 2004 through the date of the Exterran Holdings merger in August 2007.

Ms. Dorman is Chair of the Compensation Committee and a member of the Corporate Governance Committee.

     
Thomas F. Karam Age 62 Director since November 2018

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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 in June 2020, and previously served as Chairman, President and Chief Executive Officer, from October 2018 to July 2019, and as President, Chief Executive Officer and director, from August 2018 to October 2018. In addition, Mr. Karam served as Chairman, President and Chief Executive Officer of EQGP's general partner from October 2018 through the closing of the Company's acquisition of the outstanding public common units of EQGP in January 2019, as well as President, Chief Executive Officer and director from August 2018 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. 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.



   

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D. Mark Leland Age 59 Director since January 2020

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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 of Altus Midstream Company (and its predecessor) (a publicly traded midstream company providing gathering processing and transportation services in the Permian Basin) since April 2016 where he serves as the Chair of its Conflicts Committee and a member of its Audit 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 the Compensation Committee.

     
Norman J. Szydlowski Age 69 Director since November 2018

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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.



   

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Robert F. Vagt Age 73 Director since November 2018

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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 but one of our directors, who had a previous engagement, participated in the 2020 annual meeting.

In 2020, our Board held 18 meetings, with regular communication between meetings, and each of our directors serving on the Board during 2020 attended 100% 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 2020.

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Audit Committee


Members
Kenneth M. Burke (Chair)
D. Mark Leland
Robert F. Vagt
 
Meetings Held in 2020:10

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 2020:9

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 environmental, social and governance (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 2020:7

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 2020:8

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 advise 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 total direct compensation 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. 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 total direct compensation 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.

Beginning in 2019, the Compensation Committee 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 (which were subsequently amended in the third quarter of 2020), 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 that 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 other than executive officers and direct reports of the CEO pursuant to the following guidelines:

    Prior to the third quarter of 2020, CEO Awards were made to employees on the condition that no award exceeded $5,000 per employee per grant and the employee did not receive a long-term incentive grant in connection with the current year annual grant process. Effective beginning with the third quarter of 2020, CEO Awards are for the purpose of recognizing individual performance achievement as follows:

    o
    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.

    o
    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.

    Prior to the third quarter of 2020, Retention Awards were made to employees who had received a long-term incentive grant in the past on the condition that no award exceeded $25,000 per employee per grant. Effective beginning with the third quarter of 2020, 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 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."

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Board Leadership Structure

As described in the Company's corporate governance guidelines, the Board of Directors believes that the functions of the Chairman of the Board are distinct from those of the 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 May 2020 and, based on a recommendation of the Corporate Governance Committee, reappointed Mr. Karam as Chairman of the Board for a term expiring at the Board's 2021 annual meeting. The Board believes the present structure provides the Company and the Board with strong leadership and appropriate independent oversight of management, with a strong Lead Independent Director in Mr. Vagt and a board structure that is 89% independent. In addition, a combined Chairman and CEO allows the Company to communicate its business, strategy and value to shareholders, investors, employees, other stakeholders, regulators and the public with a single voice.

Under the Company's corporate governance guidelines, when the Board does not have an independent Chairman, the Board must designate an independent director as the Lead Independent Director. The Lead Independent Director's exclusive duties are described in the box on this page.

A Lead Independent Director's term is generally for one year, but an individual may serve multiple consecutive terms as the Lead Independent Director if recommended by the Corporate Governance Committee and approved by the Board.

In May 2020, 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.

Our Lead Independent Director:

convenes, presides over and sets agendas for regularly scheduled and special executive sessions of independent/non-management directors (which typically occur at each regularly scheduled meeting of the Board), and calls a meeting of the independent/non-management directors if requested by any other director;

presides over any meeting at which the Chairman is not present;

consults with the Chairman to set the annual calendar of topics to be covered at Board meetings and reviews meeting agendas;

facilitates an assessment process with respect to the Board as a whole as well as for individual directors; and

serves as the designated director to speak with shareholders (when requested) and to receive communications from interested parties.

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Board's Role in Risk Oversight

The Board

Reviews the major risks facing the Company and delegates oversight of certain major risks to applicable Board Committees
Reviews the options for mitigating major risks facing the Company
     
Audit Committee

Discusses the Company's process for assessing major risk exposures and the policies management has implemented to monitor and control such exposures, including the Company's financial risk exposures, including financial statement risk and such other risk exposures as may be delegated by the Board to the Committee for oversight, and the Company's risk management policies

Reviews the integrity of the Company's financial statements

Reviews the qualifications, independence and performance of the Company's registered public accountants

Reviews the qualifications and performance of the Company's internal audit function

  Corporate Governance Committee

Addresses governance of the Company, including its director compensation structure, that is in full compliance with law, reflects good corporate governance, encourages flexible and dynamic management without undue burdens and effectively manages the risks of the business and operations of the Company

Identifies board members of the highest possible caliber to provide insightful, intelligent, and effective guidance to management

Reviews plans for management succession

Reviews periodically and makes such recommendations regarding the Company's risks as may be delegated to the Committee by the Board

     
     
Management Development and Compensation Committee

Oversees the performance of an annual risk assessment of the Company's compensation policies and practices

Reviews periodically and makes recommendations regarding the Company's risks as may be delegated to the Committee by the Board

  Health, Safety, Security and Environmental Committee

Provides input and direction to management and the Board about the Company's approach to ESG issues and HSSE policies, programs and initiatives, and reviews the Company's activities in those areas

Reviews the overall adequacy of, and provides oversight with respect to, HSSE policies, programs, procedures and initiatives of the Company

Reviews periodically and makes recommendations regarding the Company's risks (including, without limitation, risks relating to energy transition, emissions and climate change, as well as biodiversity matters) as may be delegated to the Committee by the Board

     

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.

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Director Nominations

The responsibilities of the Corporate Governance Committee include identifying and recommending to the Board for approval the requisite skills and characteristics to be found in individuals who will serve as members of the Board. The Committee strives to ensure that the Board consists of individuals from diverse educational and professional experiences and backgrounds who, collectively, provide meaningful counsel to management. The Corporate Governance Committee reviews the qualifications and backgrounds of the directors, as well as the overall composition of the Board, and recommends to the Board for approval the slate of directors to be recommended for nomination for election at 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 of 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.

The Board initiated a search for one or more new directors in the fourth quarter of 2019. While a third-party search firm was hired to identify potential director candidates, independent directors on the Board identified Mses. Barpoulis and Collawn and Mr. Leland as potential candidates and after, among other things, a thorough vetting process, interviews with the Company's entire Board and recommendations by the Corporate Governance Committee, the Board appointed Mses. Barpoulis and Collawn and Mr. Leland to the Board effective February 1, 2020, April 1, 2020 and January 30, 2020, respectively, with terms expiring at the 2020 annual meeting of shareholders, each of whom were re-elected at such meeting. With the appointment of the three new directors, the Company has expanded its Board size to nine directors, eight of whom are independent.

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As indicated in the Corporate Governance Committee's charter, the Corporate Governance Committee will consider, in its normal course, submissions from shareholders in making its recommendations for director nominees. Any shareholder desiring to recommend an individual to serve as a director of the Company should submit the information listed below to the Corporate Governance Committee Chair, care of the Corporate Secretary. The Corporate Governance Committee will consider recommendations received no earlier than the close of business on December 28, 2021, and no later than the close of business on January 27, 2022.

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 16, 2021 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting) and not later than the close of business on November 15, 2021 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior year's annual meeting) and include the following:

    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 59.

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Contacting the Board

Interested parties may communicate directly with the Lead Independent Director (and with independent directors, individually or as a group, through the Lead Independent Director) by sending an email to ETRNPresidingDirector@equitransmidstream.com. You may also write to the Lead Independent Director, the entire Board, any Board Committee, or any individual director by addressing such communication to the applicable director or directors, care of the Corporate Secretary, at Equitrans Midstream Corporation, 2200 Energy Drive, Canonsburg, Pennsylvania 15317. The Corporate Secretary will open the communication and promptly deliver it to the Lead Independent Director or the named director, unless the communication is junk mail or a mass mailing.
 
  GRAPHIC

Governance Principles

The Company maintains a corporate governance page on its website that includes key information about its corporate governance practices, including its corporate governance guidelines, code of business conduct and ethics, and charters for each Committee of the Board. The corporate governance page can be found at www.equitransmidstream.com, by clicking on the "About" link on the main page and then on the "Governance" link. The Company will provide copies of its corporate governance guidelines, code of business conduct and ethics, and any of the Board Committee charters upon request by a shareholder to the Corporate Secretary. See "Corporate Secretary Contact Information" under the caption "Additional Information."

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The Board is committed to strong corporate governance practices. Through the Corporate Governance Committee, the Board monitors its corporate governance policies and practices against evolving best practices. Below are highlights of some of our corporate governance policies and practices.

Corporate Governance Highlights

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 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, and Corporate Governance 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 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

The Board has approved, subject to shareholder approval, the removal of 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 2020, 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.

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Sustainability and Corporate Responsibility

We recognize, and appreciate, that our shareholders, employees, customers, regulators, and other stakeholders expect us to continue to focus on long-term sustainable performance, including by addressing significant, relevant ESG factors. We have, throughout our corporate history, embraced conducting business in a socially responsible and ethical manner by respecting all stakeholders, and we believe that our continued commitment to sustainability, including minimizing impacts to the environment and society, will enable us to create long-term value. We have highlighted below certain important steps that we have taken to further communicate, structure, and embed within our operations our sustainability practices.

Enhanced Transparency Through Sustainability Reporting.     In 2020, we published our first annual corporate sustainability report (CSR), in accordance with the Global Reporting Initiative (GRI) Core option and also the Sustainability Accounting Standards Board (SASB) Oil & Gas — Midstream Standards. Our 2020 CSR highlights the results of our materiality assessment to identify the ESG topics most significant to our business and stakeholders.

Clear Board and Executive Oversight of Sustainability and Corporate Responsibility.     We took several significant steps to enhance our governance of ESG matters, including clarifying that the full Board, acting through its committees, oversees the Company's policies, programs, and strategies related to corporate social responsibility and sustainability, including ESG matters and related risks and opportunities. In 2020, we appointed a Chief Sustainability Officer to, utilizing cross-functional resources and building upon our existing achievements, design and oversee the implementation of our sustainability strategy.

Publication of Our Climate Policy.     In early 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. Our efforts include continuing to improve the accounting of greenhouse gas emissions across our value chain to comprehensively understand impacts, as well as to determine actions to lower emissions. To remain transparent and accountable in our efforts, we have committed to reporting our progress to stakeholders and routinely engaging with stakeholders, including key environmental organizations.

Linking Compensation to Meaningful Safety and Environmental Performance Goals.     Building on our continued emphasis of safe operations — above all else — the Compensation Committee has set safety- and environment-related performance goals in the Company's short-term incentive plan, including metrics for incidents with serious potential and observations and erosion and sediment control.

More information regarding our sustainability initiatives and copies of our CSR for 2020 and Climate Policy are available on our website (www.equitransmidstream.com) by selecting the "Sustainability" tab on the main page. Information included in the CSR and Climate Policy is not incorporated into this proxy statement.

Independence and Related Person Transactions

Director Independence

The NYSE listing standards and our governance documents require a majority of our directors and each member of our Audit, Compensation and Corporate Governance Committees to be independent. For a director to be considered independent, the Board must annually determine that he or she has no material relationship with the Company except as a director. To assist it in determining director independence, the Board established guidelines that meet or exceed the independence requirements under the NYSE listing standards. 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 2021, 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.

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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 review Related Person Transactions (as defined below) not otherwise approved by the Board. Company management, with the assistance of the Company's legal department, is responsible for determining whether a transaction between the Company and a Related Person (as defined below) constitutes a Related Person Transaction. This determination is based on a review of the facts and circumstances regarding the transaction, including information provided in annual director and executive officer questionnaires. If it is determined that a transaction is a Related Person Transaction that has not been approved by the Board, the material facts regarding the transaction are reported to the Corporate Governance Committee for its review. The Corporate Governance Committee, or in certain cases the Chair of the Corporate Governance Committee followed by a report to the Corporate Governance Committee, determines whether to approve, ratify, revise, reject, or take other action with respect to the Related Person Transaction.

Under the related person transaction policy, a Related Person Transaction is generally a transaction in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and a Related Person has a direct or indirect material interest 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.

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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 2020, and there are no such proposed transactions.

Related Person Transactions with EQT

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

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has served as an officer or employee of Equitrans Midstream at any time. During 2020, no Equitrans Midstream executive officer served as a member of the compensation committee or on the board of directors of any company at which a member of Equitrans Midstream's Compensation Committee or Board of Directors served as an executive officer.

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DIRECTORS' COMPENSATION

The Corporate Governance Committee reviews and the Board approves director compensation on an annual basis. No compensation is paid to employee directors for their service as directors. The Corporate Governance Committee engaged Mercer to review director compensation. Mercer performed a review of the compensation paid to our non-employee directors relative to a group of peer companies identified by Mercer and approved by the Corporate Governance Committee. In light of the non-employee directors' roles and responsibilities and after considering director compensation at relevant peer group companies, Mercer recommended the following non-employee director cash and equity-based compensation, which was approved by our Board for the 2020 and 2021 calendar years.

Compensation Feature   2020   2021
Annual cash retainer — Board member   $100,000   $100,000
Annual cash retainer — Committee Chair   Audit: $20,000

Compensation: $20,000

All other Committees: $15,000

  $20,000

$20,000

$15,000

Annual cash retainer — Committee member (excluding the Chair)   Audit: $7,500

Corporate Governance,
Compensation, HSSE:
None

  $7,500

None

Annual retainer — Chairman of the Board and Lead Independent Director   Chairman: $0

Lead Independent Director: $25,000

  $0

$25,000

Deferred stock units   Value equal to $150,000   Value equal to $150,000

Equity-Based Compensation

The Company grants to each non-employee director, on an annual basis, stock units under the ETRN LTIP, the payouts of which are deferred under Equitrans Midstream's Amended and Restated Directors' Deferred Compensation Plan (the Director Plan). Each deferred stock unit vests upon award and will be payable upon termination of service as a director of Equitrans Midstream. Each deferred stock unit is equal in value to one share of Equitrans Midstream common stock and does not have voting rights. The deferred stock unit awards are automatically deferred into the Director Plan, and dividends thereon are credited quarterly in the form of additional deferred stock units.

Newly elected non-employee directors of Equitrans Midstream are generally expected to receive an equity grant upon joining the Board equal to the pro-rata amount of the then applicable annual grant. Accordingly, Mses. Barpoulis and Collawn and Mr. Leland received pro-rated grants of 14,200, 8,440, and 13,970 deferred stock units, respectively, when they joined the Board on February 1, 2020, April 1, 2020, and January 30, 2020, respectively.

Deferred Compensation

The Company maintains the Director Plan. Under the Director Plan, in addition to the automatic deferral of deferred stock unit awards, non-employee directors are permitted to elect to defer up to 100% of their retainers and any fees into the Director Plan and receive an investment return on the deferred funds as if the funds were invested in Company common stock or permitted mutual funds. Prior to the deferral, plan participants are required to irrevocably elect to receive the deferred funds either in a lump sum or in equal annual installments. Deferred funds for which directors have elected to receive an investment return as if the funds were invested in Company common stock will be distributed in shares of Company common stock. Distributions will be made or, if applicable, commence following termination of service as a director. The directors' deferred compensation accounts are unsecured obligations of the Company. Mr. Szydlowski and Ms. Collawn deferred fees under the Director Plan during 2020.

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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.

2020 Directors' Compensation Table

The table below shows the total 2020 compensation of the Company's non-employee directors.

Name (1)


Fees Earned or
Paid in Cash
($)(2)



Stock
Awards
($)(3)



All Other
Compensation
($)(4)



Total
($)

Ms. Bailey

115,000 150,033 79,240 344,273

Ms. Barpoulis

91,484 137,314 13,243 242,041

Mr. Burke

120,000 150,033 178,503 448,536

Ms. Collawn

75,000 42,453 3,913 121,366

Ms. Dorman

122,926 150,033 41,599 314,558

Mr. Leland

96,607 138,163 13,029 247,799

Mr. Szydlowski

115,000 150,033 78,858 343,891

Mr. Vagt

132,500 150,033 78,858 361,391
(1)
Mses. Barpoulis and Collawn and Mr. Leland joined the board in February 2020, April 2020 and January 2020, respectively.

(2)
Includes annual cash retainers and committee chair fees, some of which have been deferred at the election of the director.

(3)
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 2020. On January 1, 2020, the Company granted 11,230 deferred stock units with a grant date fair value of $150,033 to each non-employee director serving at that time. On February 1, 2020, April 1, 2020, and January 30, 2020, the Company made pro-rata grants of 14,200, 8,440 and 13,970 deferred stock units to Mses. Barpoulis and Collawn and Mr. Leland, respectively, with grant date fair values of $137,314, $42,453, and $138,163, respectively. 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 $13.36 on December 31, 2019, $9.67 on January 31, 2020, $5.03 on March 30, 2020 and $9.89 on January 29, 2020.

(4)
This column reflects (i) accrued dividends on Company deferred stock units; (ii) annual premiums paid for life insurance and travel accident insurance policies ($48.46 per director other than Mr. Burke and $24.23 for Mr. Burke); (iii) the following matching gifts made to qualifying organizations under the Equitrans Midstream Foundation's Matching Gifts Program: Ms. Bailey — $22,224; Mr. Szydlowski — $50,000; and Mr. Vagt — $50,000; and (iv) with respect to Mr. Burke, compensation for his services as a director of EQM's general partner prior to the EQM Merger ($136,928, which includes fees of $32,500, accrued distributions on phantom units of $9,290, annual premiums paid for life insurance and travel accident insurance policies of $24.23 and a grant of an equity award valued at $95,114).

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EQUITY OWNERSHIP

Stock Ownership of Significant Shareholders

The following shareholders reported to the SEC or, in the case of the Series A Preferred Shares, to the Company, that they owned more than 5% of the Company's (i) outstanding common stock or (ii) outstanding Series A Preferred Shares as of December 31, 2020:

Name and Address


Shares of
Common
Stock
Beneficially
Owned





Percent of
Common
Stock
Outstanding




Shares of
Series A
Preferred
Stock
Beneficially
Owned






Percent of
Series A
Preferred
Stock
Outstanding





Capital International Investors(1)
333 South Hope Street, 55th Floor
Los Angeles, CA 90071

49,507,028 11.4 %

The Vanguard Group(2)
100 Vanguard Boulevard
Malvern, PA 19355

38,925,528 9.0 %

BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055

36,038,222 8.3 % 7,719,392 25.7 %

EQT Corporation(4)
625 Liberty Avenue, Suite 1700
Pittsburgh, PA 15222

25,296,026 5.8 %

GSO Equitable Finance LP
345 Park Avenue, 31st Floor
New York, NY 10154

7,125,591 23.7 %

NB Burlington Aggregator LP(5)
1290 Avenue of the Americas, 24th Floor
New York, NY 10104

3,752,308 12.5 %

CEQM Holdings, LLC
520 Madison Avenue, 38th Floor
New York, NY 10022

2,501,537 8.3 %
(1)
Information based on Amendment No. 2 to Schedule 13G filed with the SEC on February 16, 2021 reporting that Capital International Investors has sole voting power over 48,284,223 shares and sole dispositive power over 49,507,028 shares.
(2)
Information based on Amendment No. 2 to Schedule 13G filed with the SEC on February 10, 2021 reporting that The Vanguard Group has sole dispositive power over 38,310,635 shares, shared voting power over 285,938 shares, and shared dispositive power over 614,893 shares.
(3)
Information regarding ownership of shares of common stock is based on Amendment No. 2 to Schedule 13G filed with the SEC on January 29, 2021, reporting that BlackRock, Inc. has sole voting power over 34,340,986 shares and sole dispositive power over 36,038,222 shares. The registered holders of the shares of Series A Preferred Shares are the following funds, accounts or other entities under management by subsidiaries of BlackRock, Inc.: Investment Partners V (II), LLC and GEPIF III EQM Holdings, L.P. BlackRock, Inc. is the ultimate parent holding company of such subsidiaries. On behalf of such subsidiaries, the applicable portfolio managers, as managing directors (or in other capacities) of such entities, and/or the applicable investment committee members, have voting and investment power over the shares of Series A Preferred Stock held by the entities which are the registered holders of the referenced Series A Preferred Shares. Such portfolio managers and/or investment committee members expressly disclaim beneficial ownership of all Series A Preferred Shares held by such funds, accounts and other entities. The address of such funds, accounts or other entities, such subsidiaries and such portfolio managers and/or investment committee members is 55 East 52nd Street, New York, New York 10055, 1 Lafayette Place, Greenwich, Connecticut 06830, or 601 Union Street 56th Floor, Seattle, Washington 98101. Shares shown include only the Series A Preferred Shares that are beneficially held by BlackRock, Inc. and may not incorporate all shares deemed to be beneficially held by BlackRock, Inc.

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(4)
Information based on Amendment No. 3 to Schedule 13G filed with the SEC on February 10, 2021 reporting that EQT had sole dispositive power over 25,296,026 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.
(5)
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, 2021, determined under SEC rules, which include Company shares they had the right to acquire within 60 days after February 11, 2021. At the close of business on February 11, 2021, Equitrans Midstream had 433,931,154 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.

Name




Common
Stock (1)


Percent of
Class (2)

Non-Employee Directors:

         

Vicky A. Bailey

    67,852   *

Sarah M. Barpoulis

    34,341   *

Kenneth M. Burke

    106,181   *

Patricia K. Collawn

    36,922   *

Margaret K. Dorman

    112,252   *

D. Mark Leland

    90,984   *

Norman J. Szydlowski

    79,130   *

Robert F. Vagt

    79,269   *

Executive Officers:

         

Thomas F. Karam(3)

    1,004,611   *

Diana M. Charletta(4)

    194,884   *

Stephen M. Moore

    77,251   *

Kirk R. Oliver(5)

    99,644   *

Brian P. Pietrandrea

    21,151   *

Directors and Executive Officers as a Group: (13 individuals)

    2,004,472   *
*
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 — 65,412 units; Ms. Barpoulis — 34,341 units; Mr. Burke — 65,412 units; Ms. Collawn — 27,565 units; Ms. Dorman — 65,412 units; Mr. Karam — 3,803 units; Mr. Leland — 34,087 units; Mr. Szydlowski — 52,901 units; and Mr. Vagt — 52,900 units. For Ms. Collawn and Mr. Szydlowski, this column also includes 9,357 and 26,229 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.

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(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, 2021, all options exercisable by the executive officer and director group within 60 days of February 11, 2021, and all deferred stock units 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 9,193 shares owned by Ms. Charletta's husband, of which 72 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 Securities Exchange Act of 1934, as amended (Exchange Act), requires our directors, executive officers, and anyone holding 10% or more of a registered class of our equity securities (reporting persons) to file reports with the SEC showing their holdings of, and transactions in, these securities. Based solely on a review of copies of such reports, and written representations from each reporting person that no other reports are required, we believe that for 2020 all reporting persons filed the required reports on a timely basis under Section 16(a), except as follows. On June 18, 2020, EQT Corporation filed a late Form 4 related to the sale of 25,299,752 shares of Equitrans Midstream common stock on March 5, 2020 to the Company pursuant to those certain Share Purchase Agreements between EQT and the Company, each dated February 26, 2020. Additionally, during 2021, Mr. Leland became aware that his investment advisor, without his knowledge, sold 127 shares of the Company's common stock held indirectly by him on February 20, 2020. Promptly after Mr. Leland became aware of the sale, a Form 5 reporting the transaction was filed.

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EXECUTIVE COMPENSATION INFORMATION

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Discussion and Analysis (CD&A) describes the objectives, principles and components of the material elements of our compensation program for our named executive officers (NEOs). This CD&A focuses on the programs and related compensation for our NEOs in 2020.

Our 2020 Named Executive Officers

As of December 31, 2020, our NEOs were:

      Thomas F. Karam, Chairman and Chief Executive Officer

      Kirk R. Oliver, Senior Vice President and Chief Financial Officer

      Diana M. Charletta, President and Chief Operating Officer

      Stephen M. Moore, Senior Vice President and General Counsel

      Brian P. Pietrandrea, Vice President and Chief Accounting Officer

Our NEOs have significant experience in the energy industry and possess the necessary skills and business acumen to better position and grow our business as an independent midstream company.

This CD&A is divided into the following sections:

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Executive Summary

COMPENSATION
PHILOSOPHY AND
OVERVIEW
 

The Management Development and Compensation Committee (and for purposes of this CD&A, the Committee) functions independently from management in determining and overseeing compensation programs and practices.

The compensation program includes three key elements (base salary, annual incentives and long-term incentives) and seeks to align total direct compensation (TDC) for our NEO positions with our peers using market comparables and other relevant information.

The program is designed to pay for performance and is weighted towards variable pay which requires the Company to achieve well-defined performance metrics in order for NEOs to realize performance-based annual and long-term incentives.

Retirement and other benefit programs are the same for all employees and executive perquisites are limited.

The program delivers transparency and fairness to shareholders, employees and other stakeholders while encouraging sound business strategy and execution that leads to long-term and sustainable shareholder value.

     
COMPANY
HIGHLIGHTS IN
2020
 

Executed the EQT Global GGA, which includes a 15-year contract term, significantly increases EQT's MVCs to the Company and dedicates a substantial majority of EQT's core acreage in Pennsylvania and West Virginia to the Company.

Completed the final steps of the Company's plan to simplify its legal structure by consummating the EQM Merger.

Published our first annual corporate sustainability report as a standalone company, and established the Board-appointment position of Chief Sustainability Officer to oversee our sustainability program, including ESG matters.

In response to the COVID-19 pandemic, successfully undertook Company-wide measures to promote and maintain the safety of employees and contractors with minimal impact to the Company's operating and financial results.

Delivered 2020 net income of $638 million and 2020 adjusted EBITDA of $1.2 billion.

Achieved record gathered volumes of 8.2 TBtu/day during 2020, a 5% increase from 2019.

Delivered an 86% reduction in our Controllable Erosion and Sediment Rate (see below) from 2019.

Achieved 10% and 11% improvements in our Incidents with Serious Potential Rate (see below) and Occupational Safety and Health Administration Total Recordable Incident Rate, respectively, from 2019.

Completed an EQM senior notes offering in June 2020 resulting in net proceeds of approximately $1.6 billion, which was primarily used to repay outstanding indebtedness under EQM's $3.0 billion revolver, enhancing the Company's liquidity and strengthening the Company's balance sheet.

Added three new members to the Board, further diversifying the governance of our Company.

     

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HOW DID WE PAY
OUR NEOS IN 2020?
 

In light of market conditions, we did not provide salary adjustments for our executives during 2020. The Committee determined existing salaries were competitive versus designated peer group positions and sufficient to retain executives in the current environment.

Similarly, we did not adjust 2020 annual cash incentive targets from 2019 levels, with the exception of Mr. Pietrandrea, whose target was not competitive with peer positions.

Amounts earned under the 2020 plan year for the Short-Term Incentive Plan (STIP) were based on achievement of three performance metrics: Company EBITDA (60 percent), Controllable Costs (15 percent) and health, safety and environmental (HSE) metrics (25 percent). The Company achieved a 2020 STIP payout of 170% of target, and the awards were paid in early 2021.

2020 long-term incentive target awards (LTIP) were not adjusted from 2019 levels and were granted using a mix of three-year, performance-based restricted stock units (PRSUs) using a multi-year performance period structure and time-based restricted stock awards (RSAs), which cliff vest after three years. NEOs earn from zero to 200 percent of the target PRSUs awarded based on the relative total shareholder return (TSR) of the Company versus our TSR Peer Group (defined below), with payout capped at target in the event of a negative TSR.

We did not pay any discretionary bonuses to our NEOs in 2020.

Our first PRSUs as a standalone company were awarded in 2019 for the 2019-2021 period; thus, no payouts have been earned under the plan.

This CD&A, the "Narrative Disclosure to Summary Compensation Table" and the "2020 Grants of Plan-Based Awards Table" contain references to 2020 Company EBITDA and 2020 adjusted EBITDA, financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP), which are also referred to as non-GAAP supplemental financial measures. Attached as Appendix B are reconciliations of 2020 Company EBITDA and 2020 adjusted EBITDA to 2020 Company net income, the most directly comparable GAAP financial measure, as well as other important disclosures regarding non-GAAP financial measures.

Compensation Philosophy and Practices

In designing the 2020 compensation structure, the Committee utilized the following guidelines as the foundation for the program:

      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 are competitive with the compensation levels in the Company's Compensation Peer Group (defined below).

      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 and 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.

      The program should be transparent and fair to shareholders, employees and other stakeholders.

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

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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:

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How We Determine Executive Compensation

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 (STIP)

      long-term incentives (LTIP)

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

    Compensation Element
Description
Objectives
    Base Salary   Fixed compensation that is reviewed annually and is based on performance, experience, responsibilities, skillset and market value.  

Provide a base level of compensation that corresponds to position and responsibilities.

Attract, retain, reward and motivate qualified and experienced executives.

   
    Annual Incentive Program (STIP)   "At-risk" compensation measured against clearly-defined annual financial and operational goals, including Company EBITDA, HSE metrics & Controllable Costs.  

Incentivize executives to achieve near-term goals that ultimately contribute to long-term Company growth and shareholder returns.

 
    Long-Term Incentive Program (LTIP)   Mix of long-term target compensation consisting of PRSUs and time-based RSAs.

PRSUs earned at zero to 200 percent of target units based on TSR vs. an established performance peer group over four separate performance periods with earned amounts vesting at the end of the three-year period; payouts are capped at target in the event of a negative TSR.

RSAs subject to three-year cliff vesting.

 

Align executives' interests with those of Company shareholders.

Promote stability among leadership via incentives to remain with the Company long-term.

Incentivize executives to achieve goals that drive Company performance over the long-term.

Pay-for-performance structure that results in no payout for PRSUs in the event of poor relative performance versus peers and, with respect to each performance period, earned amounts are capped at target in the event shareholders do not experience positive returns during such performance period.

   

A majority of our NEO compensation is at-risk and is issued in the form of both short- and long-term incentives. Individuals in a position to influence the growth of shareholder wealth have larger portions of their total compensation delivered in the form of equity-based long-term incentives. The charts below reflect the fixed and at-risk of the 2020 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) our other NEOs. The amounts for each component of TDC set forth in the charts below were calculated in accordance with SEC rules. TDC, which is not a substitute for the total compensation as reported in the Summary Compensation Table on page 39 of this proxy statement, omits certain other compensation (e.g., 401(k) contributions and perquisites) that is reflected in the Summary Compensation Table. For additional information, including information regarding how total compensation is calculated under SEC rules, see the footnotes accompanying the Summary Compensation Table.

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Determination of Target Total Direct Compensation (TDC)

For 2020, the Committee established the target TDC for 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 considering 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 as well as 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 performance over the long-term.

As noted above, one of the several factors the Committee considers in determining TDC is the relationship of such TDC with a group of peer companies selected by the Committee in consultation with its independent compensation consultant. For 2020, the Compensation Peer Group was composed of the following eight companies that are generally similar to the Company with respect to business activity and of a similar size as measured by market capitalization, total assets and EBITDA:

Crestwood Equity Partners LP

 

Magellan Midstream Partners, L.P.

DCP Midstream, LP

 

ONEOK Inc.

Enable Midstream Partners, LP

 

Targa Resources Corp.

EnLink Midstream, LLC

 

Western Midstream Partners, LP

The 2020 Compensation Peer Group was unchanged from the 2019 Compensation Peer Group other than the removal of Buckeye Partners, L.P., which was acquired in the fourth quarter of 2019.

Determination of Final Total Compensation for Performance-Based Elements

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

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PRSUs as a standalone company were awarded in 2019 for the 2019-2021 period; thus, no payouts have been earned under the plan.

Role of Independent Compensation Consultant

The 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 2020, 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 over 97% of our outstanding shares voted at our 2020 annual shareholders' meeting to approve our say-on-pay proposal regarding our NEOs' 2019 compensation. Based on these results, the Committee concluded that the compensation programs and practices specifically designed to our Company's needs are in our shareholders' best interests and have strong shareholder support. Nonetheless, the Committee did undertake a thorough analysis of its compensation programs and made appropriate modifications as described below.

2020 Compensation Program Elements

The following discussion outlines the targeted 2020 executive compensation program and what we actually paid our NEOs. These compensation decisions were made in early 2020 prior to the COVID-19 pandemic. The Committee reviewed the compensation elements and determined that there was no justification for modifying the NEOs' base salaries nor the NEOs' annual or long-term incentive awards due to the ongoing COVID-19 pandemic.

2020 Base Salaries

In light of market conditions, we did not provide salary adjustments for our executives during 2020. The Committee determined existing salaries were competitive versus designated peer group positions and sufficient to retain executives in the current environment.

    Name
Title      
Base
Salary


    Thomas F. Karam   Chairman and Chief Executive Officer   $675,000       
    Kirk R. Oliver   Senior Vice President and Chief Financial Officer   $500,000     
    Diana M. Charletta   President and Chief Operating Officer   $450,000       
    Stephen M. Moore   Senior Vice President and General Counsel   $375,000     
    Brian P. Pietrandrea   Vice President and Chief Accounting Officer   $224,000       

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2020 Annual Incentives (STIP)

Our STIP focuses our NEOs' attention to achieving key near-term goals that drive long-term performance for our Company. In 2020, our STIP's performance goals and results were as shown:

STIP Metrics

In designing the STIP for 2020, our Committee determined that Company EBITDA, Controllable Costs and HSE performance metrics were key drivers to the successful execution of our business, but recommended to the Board that the weighting of Company EBITDA be increased to 60% for 2020 (from 50% for 2019) and the weighting of Controllable Costs be correspondingly decreased to 15% for 2020 (from 25% for 2019) in order to emphasize and prioritize near-term performance objectives for the Company.

    Metric
What it Measures
What it Does
    Company EBITDA  

Key business indicator used by management and our investors to evaluate overall performance.

 

Rewards our NEOs based on our annual financial results.

   
    Controllable Costs  

Evaluates how well we manage our costs.

 

Focuses attention on expenses that can erode earnings and drives overall culture of cost control.

 
    Health, Safety and Environmental  

Determines performance against stringent safety and environmental goals.

 

Promotes a culture where safety, health and the environment is embedded into all aspects of our decision-making.

   

 

    2020 STIP Performance
 
                 
    Category
Metric

Weight


Threshold
(50%)




Target
(100%)




Maximum
(200%)




2020
Results




2020
Payout


    Financial   Company EBITDA     60 % $ 1,066 (1) $ 1,171 (1) $ 1,276 (1) $ 1,228 (2)   155 %  
 
    ($ in millions)   Controllable Costs     15 % $ 332   $ 305   $ 278   $ 282 (3)   184 %  
        ISP     10 %   1.43     1.17     0.91     0.84          
 
    HSE(4)   Adj. ISP     5 %   If Actual Rate '0' — Matches ISP Rate Payout     0     200 %  
 
        Controllable Erosion and Sediment Rate     10 %   0.50     0.41     0.36     0.02          
    Total 2020 STIP Payout           170 %  
(1)
In February 2020, the Company announced the EQT Global GGA, which has resulted in the Company's recognition of a significant amount of deferred revenue during 2020. See footnote 6 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on February 23, 2021 for a detailed discussion of the Company's deferred revenue. Following the Board's approval of the 2020 performance metrics for the STIP, the Company finalized its accounting estimates related to the EQT Global GGA and determined that the Company's forecast of 2020 deferred revenue decreased by approximately $89 million from the Company's original estimate. Because deferred revenue was used to derive the original 2020 performance metrics, this would have resulted in an unintended increase to the 2020 STIP payout from 170% to 196% of the target payout, or an increase in the aggregate 2020 STIP payout of approximately $5 million. As a result, on July 22, 2020, the Board, following the recommendation thereof from the

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    Committee as well as the Company's senior management team, equitably adjusted "Threshold," "Target" and "Maximum" amounts for the Company's 2020 Company EBITDA performance metric under the STIP to remove the impact of the approximately $89 million change in the deferred revenue forecast from the approved 2020 performance metrics. In addition, the Board, following the recommendation of the Committee, determined to adjust the STIP to remove the impact of any future changes in deferred revenue from the Company EBITDA metric because the Company's employees have no control over changes to the estimated deferred revenue amounts resulting from certain provisions within the EQT Global GGA.

(2)
As provided under the STIP, the 2020 Company EBITDA calculation excludes: (i) expenses related to 2020 acquisitions; and (ii) non-recurring, non-operational gains, losses and impairments. See Appendix B for a reconciliation of Company EBITDA to net income, the most directly comparable GAAP financial measure.

(3)
Controllable Costs is calculated as the sum of the Company's Operating and Maintenance expenses and Selling, General and Administrative expenses. As provided under the STIP, the 2020 Results Controllable Costs exclude specified circumstances or events that occurred during the 2020 plan year.

(4)
HSE metrics defined as:

Incidents with Serious Potential (ISP) Rate:  Measures events with precursors that can lead to serious injuries and fatalities thereby 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.

Controllable Erosion and Sediment Rate:  Measures erosion and sediment incidents that are due to the fault of the Company, whether by design, construction or management.

2020 NEO STIP Opportunities and Payments

The Board, upon recommendation of the Committee, made no adjustments to the target percentages for the NEOs' short-term incentive plan opportunities for the 2020 plan year, other than Mr. Pietrandrea's short-term incentive plan opportunity. The Board, upon recommendation of the Committee, increased Mr. Pietrandrea's target short-term incentive opportunity by approximately 17% to $100,800 to better align his target with the market median. The NEOs' short-term incentive opportunities for 2020 were as follows:

 

 

NEO



Threshold

Target

Maximum


2020 STIP
Award Earned


 

 

Thomas F. Karam

  $ 337,500   $ 675,000   $ 1,350,000   $ 1,147,500    

 

 

Kirk R. Oliver

  $ 225,000   $ 450,000   $ 900,000   $ 765,000  

 

 

Diana M. Charletta

  $ 225,000   $ 450,000   $ 900,000   $ 765,000    

 

 

Stephen M. Moore

  $ 150,000   $ 300,000   $ 600,000   $ 510,000  

 

 

Brian P. Pietrandrea

  $ 50,400   $ 100,800   $ 201,600   $ 171,360    

STIP payouts are prorated for the portion of the year an individual is employed and based on actual performance achievement. Additionally, in the event of death, disability, qualifying retirement or change in control, the STIP would provide a prorated payout. Amounts would be forfeited in all other separation scenarios. The Committee has the authority to make exceptions to the treatment of payouts under the STIP.

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Long-Term Incentive Program (LTIP)

Our LTIP aligns our NEOs' interests with those of our shareholders by providing the opportunity to earn incentive compensation based on the Company's long-term success.

Both RSAs and PRSUs awarded to our NEOs are paid in Company stock, further aligning their interests with those of our shareholders.

Time-Based RSAs

The time-based RSAs issued under the 2020 LTIP program cliff vest after three years of continuous service following the vesting commencement date, which was January 1, 2020. The grant of time-based RSAs helps align our NEOs' interests with those of our shareholders and provides a powerful retention incentive that assists us in maintaining continuity among our senior executive team.

Performance-Based RSUs (PRSUs)

For purposes of the 2020 LTIP, the Committee continued to refine the performance-based aspects of the incentive structure instituted following the Company's Separation from EQT. The Committee, with input from other members of the Board and the Committee's independent compensation consultant, undertook a thorough review of the design and performance metrics used for the Company's performance-based program. The Committee elected to eliminate the Cumulative TSR Per Share metric used in 2019, as the primary driver (i.e., share price) was already reflected in the existing Relative TSR metric. The Committee also implemented a multi-year performance period structure that the Committee believed would enhance the retentive effect of the program and incorporated a negative TSR cap for the 2020 long-term incentive program. The Committee believed that the ability for employees to earn a portion of the PRSUs each year, based on the Company's Relative TSR performance, enhanced the award's retention element, while providing that the largest incremental portion of the program weighted towards a three-year performance period continued to emphasize the importance of delivering long-term value creation for the Company's shareholders. All PRSUs are eligible to vest, to the extent earned, at the end of the three-year period. The Committee recommended, and the Board approved, the above modifications for the 2020 long-term performance-based incentive design.

The PRSUs issued under the 2020 LTIP program may be earned over four separate performance periods as follows: (i) 20% for each of the three calendar years that occur following the vesting commencement date (i.e., the 2020, 2021 and 2022 calendar years) and (ii) 40% for the cumulative three-year period following the vesting commencement date (i.e., January 1, 2020 through December 31, 2022) (such three-year period, the cumulative performance period). All payouts for the PRSUs are contingent on continued employment over the full three-year performance period and are paid following the Committee's certification of results following the end of such performance period.

By basing our PRSUs on Relative TSR performance over the 2020-2022 performance period, we align our NEOs' interests with those of our shareholders by tying compensation outcomes to our performance relative to our TSR Peer Group and to delivering shareholder value.

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The table below summarizes the Relative TSR performance goals and potential payouts for each of the four performance periods:

    
2020-2022 PRSUs — Relative TSR*


 

 


Threshold



Target



Maximum



  25th Percentile 50th Percentile 75th Percentile
or Above
 
  50% Payout 100% Payout 200% Payout  
*   TSR performance between points will be determined by straight-line interpolation. In the event that the Company's TSR is negative for any one of the four performance periods, the payout will not exceed 100% of target for such performance period notwithstanding performance above target.

Our 2020 TSR Peer Group consists of a subset of similarly-sized C-corporations with market values in excess of $2 billion included in the Alerian US Midstream Energy Index (AMUS), as well as all members of the Compensation Peer Group. The Committee selected the TSR Peer Group in consultation with Mercer, its independent compensation consultant. The 2020 TSR Peer Group represents a decrease in peer companies from our 2019 peer group, based upon market consolidation, as well as, a selection of companies that the Committee believes are more aligned with the Company's corporate structure and dividend policy following the EQM Merger. The Committee believes this larger peer group (as compared to the Compensation Peer Group) is appropriate as it represents the companies with which the Company competes for investment purposes.

Antero Midstream Corporation

 

Kinder Morgan, Inc.

Cheniere Energy, Inc.

 

Magellan Midstream Partners, L.P.

Crestwood Equity Partners LP

 

ONEOK Inc.

DCP Midstream, LP

 

Targa Resources Corp.

Enable Midstream Partners, LP

 

The Williams Companies, Inc.

EnLink Midstream, LLC

 

Western Midstream Partners, LP

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

The target long-term incentive awards to the NEOs were made consistent with the Committee's methodology described above and were unchanged from the target long-term incentive awards (by dollar value) approved for the NEOs in 2019. The number of RSAs and PRSUs awarded to the NEOs were as follows:

 

 

NEO




2020 Time-Based
RSAs Awarded




2020 PRSUs
Awarded


 

 

Thomas F. Karam

    121,260     181,890    

 

 

Kirk R. Oliver

  23,960   35,930  

 

 

Diana M. Charletta

    40,420     60,630    

 

 

Stephen M. Moore

  21,670   32,510  

 

 

Brian P. Pietrandrea

    5,970     8,960    

EQT 2018 IPSUP Long-Term Incentive Awards

In February 2021, the Committee certified the performance for the two-thirds of the EQT 2018 Incentive Performance Share Unit Program (EQT 2018 IPSUP) award component that was subject to performance goals established by our Board, upon recommendation of our Committee.

The remaining one-third of the EQT 2018 IPSUP performance shares remained subject to and were earned based on actual performance of EQT for the period beginning January 1, 2018 and ended on December 31, 2018.

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Our Committee had no involvement in the setting of performance goals for the one-third portion of the EQT 2018 IPSUP that is attributable to the 2018 calendar year or the two-thirds of the EQT 2018 IPSUP award component that was subject to performance goals established by EQT; however, as a result of the Separation, it certifies performance achievement pursuant to the applicable plan documents and an Employee Matters Agreement, dated November 12, 2018, between us and EQT.

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, 2020, Mr. Karam met his ownership guidelines, as his Company stock holdings represented approximately 10 times his base salary. Our remaining NEOs are on track to satisfy the guidelines within the prescribed time period.

Retirement Program

Our NEOs participate in the same defined contribution 401(k) plan as all other Company employees. During 2020, 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. Beginning in 2020, Mr. Karam also was reimbursed for a one-time club initiation fee as well as the costs of his 2020 monthly dues. The Company reflected the entire cost of the membership, including the initiation fee and monthly dues 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 named executive officers during 2020.

Compensation Policies and Practices and Risk Management

In early 2021, 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

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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 balanced 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.

As explained below, in March 2020 the Company replaced Mr. Pietrandrea's existing confidentiality, non-solicitation and non-competition agreement with a confidentiality, non-solicitation and change of control agreement in connection with a holistic review of all of our agreements with our executive officers. See "Potential Payments Upon Termination or Change of Control" below for additional information on Mr. Pietrandrea's confidentiality, non-solicitation and change of control agreement.

Report of the Management Development and Compensation Committee

We have reviewed and discussed the CD&A with the Company's management. Based on our review and discussions, we recommend to the Board of Directors that the CD&A be included in the Equitrans Midstream Corporation Proxy Statement for 2021.

This report has been furnished by the Management Development and Compensation Committee
of the Board of Directors.

Margaret K. Dorman, Chair
Patricia K. Collawn
D. Mark Leland
Norman J. Szydlowski

EXECUTIVE COMPENSATION TABLES

The following tables reflect the compensation of the Company's NEOs. The information set forth below with respect to the period prior to the Separation is historical EQT compensation. This historical EQT compensation, which was, as applicable, approved by the EQT Corporation Management Development and Compensation Committee, has been provided by, or derived from information provided by, EQT and reflects compensation earned during 2018 prior to the Separation based upon services performed during such periods. The Company provided the compensation information for periods following the Separation in 2018, most of which was attributable to EQT programs assumed by the Company as a result of the Separation, and for 2019 and 2020, which reflects the Company's own compensation program as an independent company.

38    Equitrans Midstream Corporation - 2021 Proxy Statement


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Summary Compensation Table

The table below sets forth the compensation earned by or paid to our NEOs during the fiscal years ended December 31, 2020, 2019, and 2018, as applicable.

  Name and Principal Position
Year
Salary ($)
Bonus ($)
Stock Awards ($)(1)
Non-equity Incentive
Plan Compensation ($)(2)


All Other Compensation ($)(3)
Total
($)


 
  Thomas F. Karam 2020 675,000 2,636,435 1,147,500 203,759 4,662,694  
  Chairman and Chief 2019 680,769 3,251,737 1,035,057 45,659 5,013,222  
  Executive Officer 2018 212,308 267,000 3,000,230 205,941 3,685,479  
  Kirk R. Oliver 2020 500,001 520,883 765,000 44,772 1,830,656
  Senior Vice President 2019 500,001 642,317 693,000 44,500 1,879,818
  and Chief Financial Officer 2018 134,616 20,000 405,538 10,189 570,343
  Diana M. Charletta 2020 450,000 878,811 765,000 44,656 2,138,467  
  President and Chief 2019 429,940 963,476 641,812 44,371 2,079,599  
  Operating Officer 2018 283,167 321,040 510,890 36,017 1,151,114  
  Stephen M. Moore 2020 375,001 471,177 510,000 44,487 1,400,665
  Senior Vice President 2019 252,405 596,994 462,000 23,378 1,334,777
  and General Counsel 2018
  Brian P. Pietrandrea 2020 224,000 129,827 171,360 26,161 551,348  
  Vice President and 2019 210,360 32,579 96,349 132,821 19,526 491,635  
  Chief Accounting Officer 2018  
(1)
The amounts for 2020 in this column reflect the aggregate grant date fair values determined in accordance with FASB ASC Topic 718 using the assumptions described in Note 10 to the Company's Consolidated Financial Statements, which is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 23, 2021. With respect to stock awards granted in 2020, the table below sets forth the value attributable to performance restricted stock units under the 2020 Equitrans Midstream Corporation Performance Share Unit Program (2020 PSUP) valued at target achievement. Pursuant to SEC rules, the amounts included for awards subject to performance conditions are based on the probable outcome as of the date of grant, which would have amounted to the target total grant date fair values listed in the table below. These performance restricted stock units under the 2020 PSUP may pay out up to 200% of the target award, which would have amounted to the maximum total grant date fair values listed in the table below.

 

                     Name


Target Total Grant
Date Fair Value
($)



Maximum Total Grant
Date Fair Value
($)



 

Thomas F. Karam

1,016,401 2,032,802  

 

Kirk R. Oliver

200,777 401,554

 

Diana M. Charletta

338,800 677,600  

 

Stephen M. Moore

181,666 363,332

 

Brian P. Pietrandrea

50,068 100,136  

See "Long-Term Incentive Program (LTIP)" in the "Compensation Discussion and Analysis" above for further discussion of the 2020 PSUP as well as the 2020 Equitrans Midstream Corporation Restricted Share Awards.

(2)
The amounts for 2020 in this column reflect the annual performance incentives earned by each NEO pursuant to the terms of the Equitrans Midstream Corporation Amended and Restated Short-Term Incentive Plan (STIP) with respect to performance during the year ended December 31, 2020. These awards were paid to the NEOs in cash in the first quarter of 2021. See "2020 Annual Incentives (STIP)" in the "Compensation Discussion and Analysis" above for further discussion of the STIP for the 2020 plan year.

Equitrans Midstream Corporation - 2021 Proxy Statement     39


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(3)
This column includes the dollar value of premiums paid by the Company for group life and accidental death and dismemberment insurance, the Company's contributions to the 401(k) plan, and perquisites. For 2020, these amounts were as follows:

 

Name


Insurance
Premiums
($)



401(k)
Contributions
($)



Perquisites
($)(a)


Other
($)(b)


Total
($)


 

Thomas F. Karam

1,539 25,650 175,370 1,200 203,759  

 

Kirk R. Oliver

1,142 25,650 17,980 44,772

 

Diana M. Charletta

1,026 25,650 17,980 44,656  

 

Stephen M. Moore

857 25,650 17,980 44,487

 

Brian P. Pietrandrea

511 25,650 26,161  
    (a)
    Amounts in the perquisite column include the following:

    A stipend to be used for financial planning.

    The cost of providing the executive physical benefit, which includes preferred access to healthcare professionals and related services for the executives.

    For Mr. Karam, the entire cost of one-time club initiation fees and 2020 monthly dues (totaling an aggregate of $157,390), although the Company believes that only a portion of the cost represents a perquisite.

    (b)
    Represents the opt-out payment in connection with Mr. Karam's waiver of Company medical benefits.

2020 Grants of Plan-Based Awards Table

The table below sets forth additional information regarding restricted shares and restricted share units granted to our NEOs during the 2020 fiscal year.

 

      Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards



Estimated Future Payouts
Under Equity Incentive Plan
Awards



All Other
Stock
Awards:
Number of
Shares





Grant
Date Fair
Value of
Stock and




 

 

Name


Type of Award (1)
Grant
Date


Approval
Date


Threshold
($)


Target
($)(2)


Maximum
($)(2)


Threshold
(#)


Target
(#)(3)


Maximum
(#)(3)