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2019 PROXY STATEMENT TABLE OF CONTENTS
EXECUTIVE COMPENSATION

Table of Contents

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

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

EQT Corporation

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LOGO

May 22, 2019

Fellow Shareholders,

On behalf of the Board of Directors (the "Board") and senior management team of EQT Corporation (the "Company" or "EQT"), I am pleased to invite you to participate in our 2019 annual meeting of shareholders, which will be held at EQT Plaza, located at 625 Liberty Avenue in Pittsburgh, Pennsylvania on Wednesday, July 10, 2019, at 8:00 a.m. (Eastern Time).

EQT continues to undertake critical, transformational steps to deliver value to our shareholders. During 2018, to address our sum-of-the-parts discount and complex corporate structure, we executed a series of midstream simplification transactions and completed the spin-off of our midstream business, transforming EQT into a free cash flow-focused, pure play Appalachian upstream company with a simplified structure and strong balance sheet. EQT also revamped its leadership team, as I became Chief Executive Officer and we appointed a new Chief Financial Officer, Head of Investor Relations and General Counsel. We also began our search for a new Chief Operating Officer with a proven track record of enhancing well productivity, driving down costs, and increasing efficiencies. This search culminated with our hire of industry veteran Gary Gould, who joined our company in April 2019. We are a new company with a new team that is laser-focused on driving operating efficiencies. And importantly, as we have shifted from focusing on production growth to delivering free cash flow, we are continuing to adhere to the highest standards of safety and environmental sustainability.

In early 2019, we completed a thorough and comprehensive plan to realize our vision of accelerating free cash flow growth and delivering meaningful shareholder value. We are executing on this plan, as evidenced by our strong financial and operational performance in the fourth quarter of 2018 and the first quarter of 2019. EQT has already improved volumes, delivered operational efficiencies and significantly reduced costs, demonstrating our ability to deliver strong free cash flow growth and manage capital expenditures at levels that achieve or exceed expectations. And, with our full team now in place, there is much more to come, including from our "Target 10%" initiative – our commitment to improving operations and reducing annual cash costs by an incremental 10% by 2020 – to further drive down costs.

The Board has been instrumental in spearheading our new corporate strategy. The decision to separate our midstream business was made following extensive shareholder engagement and a detailed review by a committee of the Board formed to determine how to best address the Company's sum-of-the-parts discount. In 2018, the Board initiated a refreshment that resulted in the addition of four new, highly qualified and independent directors, and will continue with the nomination of three new director candidates with extensive upstream, operating and executive experience for election at the 2019 annual meeting. In support of this refreshment, three of our longest-serving directors, including our Chairman of the Board, Chair of our Corporate Governance Committee and Chair of our Management Development and Compensation Committee, have each determined not to stand for reelection at the 2019 annual meeting. We thank Messrs. Rohr and Cary and Dr. Todd for their service and dedication to our company. If the nominees recommended by the Board are elected, a majority of the Board will consist of new independent directors who joined in 2018 and 2019. The Board has also determined to nominate incumbent director Daniel J. Rice IV for reelection at the 2019 annual meeting. The Board believes that Mr. Rice brings relevant experience with regard to Rice Energy's legacy assets and


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unique perspectives to the EQT boardroom. The Board believes his continued service on the Board is appropriate in light of the Rice family's 3.1% ownership in EQT.

Your vote is especially important this year. Toby Z. Rice (together with Derek A. Rice and other participants, the "Rice Group") has notified the Company of his intention to nominate a slate of nine individuals (which he has reduced to a slate of seven individuals) for election to the Board at the 2019 annual meeting in opposition to the highly qualified nominees recommended by the Board. The Rice Group's platform is to elect a Board that will appoint Toby Z. Rice as Chief Executive Officer and replace up to 15 of the Company's department heads with individuals from the former Rice Energy. The Rice Group is effectively asking you to just turn over control of your Company and immediately jeopardize the value of your investment by installing their friends in a highly de-stabilizing transition for our shareholders and employees, just as our new management team and employees are successfully executing on a proven and comprehensive plan to accelerate free cash flow growth and reduce costs.

To ensure that shareholders are provided with the greatest flexibility when selecting directors at the 2019 annual meeting, the Board has adopted a universal proxy card. Universal proxy cards have been advocated for by the Securities and Exchange Commission (the "SEC"), institutional investors, and proxy advisory firms, as a way to ensure a fairer, less cumbersome voting process. The EQT Board's decision to use a universal proxy card further demonstrates its commitment to best-in-class governance practices. A universal proxy card provides for all nominees put forth by the Board and the Rice Group to be listed on the same proxy card, allowing shareholders to elect any combination of director nominees they choose without attending the shareholder meeting in person.

Enclosed with your proxy materials is a GOLD universal proxy card, which is being solicited on behalf of our Board. I strongly urge you to read the accompanying Notice of Annual Meeting and Proxy Statement carefully and vote FOR the Board's nominees and in accordance with the Board's recommendations on the other proposals by using the enclosed GOLD universal proxy card. You may also vote via the Internet or by telephone as instructed on the GOLD universal proxy card. IMPORTANTLY, IF YOU MARK "FOR" FOR MORE THAN 12 NOMINEES FOR THE ELECTION OF DIRECTORS, ALL OF YOUR VOTES FOR THE ELECTION OF DIRECTORS WILL BE DEEMED INVALID. Please vote by whichever method is most convenient for you to ensure that your shares are represented at the 2019 annual meeting. If you have previously voted using a white proxy card sent to you by the Rice Group in connection with the 2019 annual meeting, you can revoke it at any time prior to the annual meeting by voting on the enclosed GOLD universal proxy card. Only your latest dated proxy card will count.

Whether you plan to attend the 2019 annual meeting or not, we urge you to return the enclosed GOLD universal proxy card as soon as possible. This will ensure representation of your shares at the 2019 annual meeting.

Thank you for your continued support as a valued shareholder and for being a part of our great company.

GRAPHIC

Robert J. McNally
President and Chief Executive Officer

EQT Corporation | 625 Liberty Avenue Suite 1700 | Pittsburgh, PA 15222-3111


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LOGO       625 Liberty Avenue, Suite 1700
Pittsburgh, PA 15222

Notice of Annual Meeting of Shareholders
To Be Held July 10, 2019

The 2019 annual meeting of shareholders (the "2019 annual meeting") of EQT Corporation (the "Company" or "EQT") will be held on Wednesday, July 10, at EQT Plaza, located at 625 Liberty Avenue in Pittsburgh, Pennsylvania at 8:00 a.m. (Eastern Time). If you owned common stock of EQT at the close of business on May 14, 2019, the record date, you may vote at this meeting.

        At the meeting, we plan to ask you to:

    (1)
    Elect the 12 directors nominated by the Board of Directors and named in the accompanying proxy statement to serve for a one-year term;

    (2)
    Approve a non-binding resolution regarding the compensation of the Company's named executive officers for 2018 (say-on-pay);

    (3)
    Approve the EQT Corporation 2019 Long-Term Incentive Plan; and

    (4)
    Ratify the appointment of Ernst & Young LLP as EQT's independent registered public accounting firm for 2019.

In addition to the foregoing, the meeting will include the transaction of such other business as may properly be presented at the meeting or any adjournment, postponement, rescheduling, or continuation of the meeting.

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

Please note that Toby Z. Rice (together with Derek A Rice and other participants, the "Rice Group") has provided notice to the Company of his intent to nominate a slate of nine nominees (which he has reduced to a slate of seven nominees) (each, a "Rice nominee" and, collectively, the "Rice nominees") for election as directors at the 2019 annual meeting in opposition to the nominees proposed by our Board of Directors. You may receive solicitation materials from the Rice Group, including proxy statements and white proxy cards. We are not responsible for the accuracy of any information provided by or relating to the Rice Group or the Rice nominees contained in solicitation materials filed or disseminated by or on behalf of the Rice Group or any other statements the Rice Group or its representatives may make.

The Board of Directors does NOT endorse the Rice nominee slate and the independent members of our Board unanimously recommend that you vote FOR the election of each of the nominees proposed by the Board. Our Board of Directors strongly urges you not to sign or return any white proxy card sent to you by Toby Z. Rice or the Rice Group. If you have previously submitted a white proxy card sent to you by the Rice Group, you can revoke that proxy and vote for our Board's nominees and on the other matters to be voted on at the 2019 annual meeting by using the enclosed GOLD universal proxy card. IMPORTANTLY, IF YOU MARK "FOR" FOR MORE THAN 12 NOMINEES FOR THE ELECTION OF DIRECTORS, ALL OF YOUR VOTES FOR THE ELECTION OF DIRECTORS WILL BE DEEMED INVALID.


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If you plan to attend the 2019 annual meeting, please follow the advance registration instructions under "Questions and Answers About the Annual Meeting – Who can attend the annual meeting, and how do I obtain an admission ticket?" on page 16 of the proxy statement and watch for an admission ticket in the mail. You will need an admission ticket to enter the 2019 annual meeting.

    On behalf of the Board of Directors,

 

 

GRAPHIC
    Nicole King Yohe
Corporate Secretary


Important Notice Regarding the Availability of
Proxy Materials for the Annual Meeting of Shareholders to be held on July 10, 2019

Our proxy statement is attached. Financial and other information concerning our company is contained in our annual report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Annual Report"). This proxy statement, the 2018 Annual Report and a GOLD universal proxy card are available free of charge at www.eproxyaccess.com/eqt.



2019 PROXY STATEMENT TABLE OF CONTENTS

  Page 

2019 Proxy Statement Summary

  1

Proxy Statement

 
10

Questions and Answers About the Annual Meeting

 
10

Background of the Solicitation

 
19

Item No. 1 – Election of Directors

 
21

Corporate Governance and Board Matters

 
23

Board Meetings and Committees

  30

Compensation Process

  32

Board Leadership Structure

  34

Board's Role in Risk Oversight

  35

Enterprise Risk Committee

  36

Director Nominations

  36

Contacting the Board

  39

Governance Principles

  39

Independence and Related Person Transactions

  40

Review, Approval or Ratification of Transactions with Related Persons

  40

Transactions with Related Persons

  41

Compensation Committee Interlocks and Insider Participation

  42

Directors' Compensation

 
43

Equity Ownership

 
47

Executive Compensation

 
50

Compensation Discussion and Analysis

 
51

Message from the Management Development and Compensation Committee

  51

Compensation Program Summary

  52

Compensation Philosophy

  60

Compensation Decisions for 2018

  62

Cautionary Statements

 
89

Report of the Management Development and Compensation Committee

 
89

Compensation Policies and Practices and Risk Management

 
89

Compensation Tables

 
90

Summary Compensation Table

  91

2018 Grants of Plan-Based Awards Table

  93

Narrative Disclosure to Summary Compensation Table and 2018 Grants of Plan-Based Awards Table

  94

Outstanding Equity Awards at Fiscal Year-End

  97

  Page 

Option Exercises and Stock Vested

  98

Pension Benefits and Non-qualified Deferred Compensation

  99

Potential Payments Upon Termination or Change of Control

  99

Payments to be Made Pursuant to Written Agreements with the Named Executive Officers

  99

Payments to be Made Pursuant to Company Plans

  102

Payments Triggered Upon Hypothetical Termination of Employment or Change of Control on December 31, 2018

  106

Pay Ratio Disclosure

  113

Item No. 2 – Approval of a Non-Binding Resolution Regarding the Compensation of the Company's Named Executive Officers for 2018 (Say-On-Pay)

 
114

Item No. 3 – Approval of the EQT Corporation 2019 Long-Term Incentive Plan

 
115

Report of the Audit Committee

 
131

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

 
132

Additional Information

 
134

Appendices

 
 

Appendix A – Director Compensation Peer Companies

  A-1

Appendix B – 2017 Peer Group – Financial Metrics, 2018 Peer Group – Financial Metrics, and 2019 Peer Group – Financial Metrics

  B-1

Appendix C – Non-GAAP Financial Information

  C-1

Appendix D – Incentive Performance Share Unit Program Payout Matrix 2018 Program and Incentive Performance Share Unit Program Payout Matrix 2019 Program

  D-1

Appendix E – EQT Corporation 2019 Long-Term Incentive Plan

  E-1

Appendix F – Supplemental Information Regarding Participants

  F-1

Appendix G – Supplemental Information Regarding Participants Associated with the Rice Group

  G-1

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EQT CORPORATION
2019 PROXY STATEMENT SUMMARY

This summary highlights information about EQT Corporation (the "Company" or "EQT") and the upcoming 2019 annual meeting of shareholders (the "2019 annual meeting"). As it is only a summary, please review the complete proxy statement and EQT's annual report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Annual Report") before you vote. The proxy statement and 2018 Annual Report will first be mailed or released to shareholders on or about May 24, 2019.

Annual Meeting of Shareholders

Time and Date:

  8:00 a.m. (Eastern Time) on Wednesday, July 10, 2019

Place:

 

EQT Plaza
625 Liberty Avenue
Pittsburgh, PA 15222

Record Date:

 

May 14, 2019

Admission:

 

You are entitled to attend the 2019 annual meeting if you were an EQT shareholder as of the close of business on the record date. If you plan to attend the meeting, you must obtain an admission ticket and abide by the agenda and procedures for the annual meeting (which will be distributed at the meeting). If your shares are held by a broker, bank or other holder of record in "street name" (including shares held in certain EQT employee benefit plans), you must also provide proof of your ownership of the shares as of the record date in order to attend the meeting. See "Questions and Answers About the Annual Meeting – Who can attend the annual meeting, and how do I obtain an admission ticket?" on page 16 of this proxy statement for additional information and instructions.

Voting Matters and Board Recommendations

 
  Board Voting
Recommendation
  Page Reference
(for more detail)

       

Election of 12 directors, each for a one-year term expiring at the 2020 annual meeting of shareholders (Item No. 1)

 

FOR EACH EQT
DIRECTOR
NOMINEE

 

21

Management Proposals:

 

 

 

 

Approval of a non-binding resolution regarding the compensation of EQT's named executive officers for 2018 (Item No. 2)

 

FOR

 

114

Approval of the EQT Corporation 2019 Long-Term Incentive Plan (Item No. 3)

 

FOR

 

115

Ratification of appointment of independent registered public accounting firm (Item No. 4)

 

FOR

 

132

    EQT Corporation - 2019 Proxy Statement    1


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You may receive solicitation materials from Toby Z. Rice (together with Derek A. Rice and other participants, the "Rice Group"), including a white proxy card. Our Board of Directors does not endorse the Rice Group nominee slate and the independent members of our Board unanimously recommend that you not sign or return any white proxy card sent to you by the Rice Group. If you previously have signed a white proxy card sent to you by the Rice Group, you can revoke it by signing, dating and mailing the enclosed GOLD universal proxy card in the envelope provided. Only your last dated proxy will count. IMPORTANTLY, IF YOU MARK "FOR" FOR MORE THAN 12 NOMINEES FOR THE ELECTION OF DIRECTORS, ALL OF YOUR VOTES FOR THE ELECTION OF DIRECTORS WILL BE DEEMED INVALID.

Director Nominees

The Board of Directors has nominated the director candidates below. All director nominees have stated that they are willing to serve if elected. Personal information about each director nominee is available beginning on page 23.

Name



Age

Director
Since


Principal Occupation

Independent

Committee
Memberships

  Philip G. Behrman, Ph.D.

    68   2008   Former Senior Vice President, Worldwide Exploration, Marathon Oil Corporation   X   AC, OCEC, PPC

  Janet L. Carrig

 

61

 

-

 

Former Senior Vice President, Legal, General Counsel and Corporate Secretary, ConocoPhillips

 

X

 

-

  Christina A. Cassotis

   
54
 

2018

 

Chief Executive Officer, Allegheny County Airport Authority

 

X

 

CGC, PPC

  William M. Lambert

 

61

 

2018

 

Former Chairman, President and Chief Executive Officer, MSA Safety, Inc.

 

X

 

AC, MDCC

  Gerald F. MacCleary

   
65
 

2018

 

Chief Executive Officer and Chairman, Covestro LLC (formerly Bayer Material Science)

 

X

 

AC

  James T. McManus II

 

60

 

-

 

Former Chairman, Chief Executive Officer and President, Energen Corporation

 

X

 

-

  Valerie A. Mitchell

   
47
 

-

 

Founding member and Chief Executive Officer, Corterra Energy

 

X

 

-

  Robert J. McNally

 

48

 

2018

 

President and Chief Executive Officer, EQT Corporation

 

 

EC, PPC

  Anita M. Powers

   
63
 

2018

 

Former Executive Vice President of Worldwide Exploration, Occidental Oil and Gas Corporation

 

X

 

OCEC (Chair), EC

  Daniel J. Rice IV

 

38

 

2017

 

Former Chief Executive Officer, Rice Energy Inc.

 

 

PPC

  Stephen A. Thorington

   
63
 

2010

 

Former Executive Vice President and Chief Financial Officer, Plains Exploration and Production Company

 

X

 

AC (Chair), EC, OCEC

  Christine J. Toretti

 

62

 

2015

 

President, Palladio, LLC

 

X

 

CGC, EC, PPC (Chair), OCEC

 

AC   Audit Committee   MDCC   Management Development and Compensation Committee    
CGC   Corporate Governance Committee   OCEC   Operating and Capital Efficiency Committee    
EC   Executive Committee   PPC   Public Policy and Corporate Responsibility Committee    

Snapshot of 2019 Director Nominees

We believe that all of our 2019 director nominees exhibit the following characteristics:

    High Degree of Integrity
    Innovative Thinking
    Proven Track Records of Success
    Knowledge of Corporate Governance Requirements and Best Practices

    EQT Corporation - 2019 Proxy Statement    2


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We also believe that our director nominees exhibit an effective and robust mix of skills, experiences, diversity, and perspectives:

GRAPHIC

    Average Tenure of 2.3 Years
    75% have served one year or less

See the director nominee biographies beginning on page 23 for further detail.

    EQT Corporation - 2019 Proxy Statement    3


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Governance Highlights

We are committed to good corporate governance, which promotes the long-term interests of shareholders and strengthens Board and management accountability. The Corporate Governance Matters section beginning on page 29 describes our governance framework, which includes the following highlights:

Board Practices

    10 out of 12 director nominees are independent
    Robust director nominee selection process
    Commitment to Board refreshment; added five new directors in 2018 (four of whom were independent) and recommended the addition of three new director nominees in 2019 (all of whom are independent)
    All members of the Audit, Management Development and Compensation Corporate Governance and Operating and Capital Efficiency Committees are independent
    Independent Chairman of the Board
    All directors stand for election annually
    Majority voting standard for uncontested director elections
    16 full Board meetings in 2018
    In 2018, overall attendance at all of the meetings of the Board and the Board committees was over 97%
    Frequent meetings of independent directors in executive session without any EQT officer present (six in 2018)
    Annual review by the Board of EQT's major risks with certain oversight delegated to Board committees

Shareholder Matters

    Long-standing, significant shareholder engagement
    Proxy access right
    Annual "say-on-pay" vote

Other Best Practices

    Long-standing commitment to sustainability, with initiatives on sustainability, environmental matters and social responsibility
    Compensation recoupment ("clawback") policy applicable to all current and former executive officers
    Hedging and pledging of EQT securities by executive officers and directors is prohibited
    "Double trigger" payout rights under long-term incentive awards
    Significant equity ownership guidelines for executive officers (value of eight times base salary for Chief Executive Officer; value of three times base salary for other executive officers)
    Significant equity ownership guidelines for non-employee directors requiring them to hold shares with a value equal to five times the annual retainer

Board Refreshment in 2018 and 2019

The Board believes that its members, as a group, should possess skills and qualifications that best enable it to formulate and oversee the implementation of the Company's strategy. The Company has evolved over the last 15 years from a retail utility to an integrated natural gas producer, and now, with the separation of the midstream business in 2018, EQT is a pure play E&P company and the largest natural gas producer in the United States. As our business mix has evolved, the

4    EQT Corporation - 2019 Proxy Statement    


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appropriate skill set for our leadership has evolved with it, and the Company's Board has therefore also evolved over the years to best serve the needs of the Company and its shareholders. In the course of pursuing the separation of the midstream business in 2018, the Board evaluated the expected needs of the upstream business and appointed five new directors that it believed would complement the capabilities of EQT's Board following the Spin-off (defined below).

Following the Spin-off, the Corporate Governance Committee conducted its annual review of the Board's composition. In connection with its review and the desire to further refresh the Board's membership, the Corporate Governance Committee determined that adding new directors that were independent of the Company and that had E&P industry experience, governance experience, operational leadership, and/or senior executive management experience to the Board would further enhance the Board's collective skill set. Working with a leading director search firm, the Corporate Governance Committee concluded that each of Mses. Carrig and Mitchell and Mr. McManus were best suited to join the Board and will help the Board steer the Company to create and deliver long-term shareholder value.

The Company is pleased to recommend new candidates for the Board with very distinguished careers and experience in the oil and gas industry and who also specifically address the desired criteria that the Corporate Governance Committee identified. Of the 12 EQT director nominees:

    Nine have direct oil and gas industry upstream experience;

    Five have engineering or geology experience;

    Nine have CEO or CFO experience, six of whom with energy companies;

    Eight will have joined the Board within the last year if elected; and

    Ten are independent.

The actions taken by the Corporate Governance Committee in connection with the 2019 annual meeting were taken jointly with the 2019 Annual Meeting Committee, a Board committee formed in April 2019 for the purposes of taking actions in connection with the 2019 annual meeting.

Universal Proxy Card

To ensure that shareholders are provided with the greatest flexibility when selecting directors at the 2019 annual meeting, the Board has adopted a universal proxy card. Universal proxy cards have been advocated for by the SEC, institutional investors and proxy advisory firms as a way to ensure a fairer, less cumbersome voting process. A universal proxy card provides for all nominees put forth by the Board and the Rice Group to be listed on the same proxy card, allowing shareholders to elect any combination of director nominees they choose without attending the shareholder meeting in person. The Board's nominees have each consented to being named on Rice's universal card and to serve as a director of EQT if elected as such at the 2019 annual meeting. The Rice nominees have each consented to being named on the Company's universal card and to serve as a director of EQT if elected as such at the 2019 annual meeting.

Shareholder Engagement

We value feedback from our shareholders and are committed to maintaining an active dialogue with our shareholders year-round. We maintain a robust investor relations program, through which senior executives held more than 660 meetings with investors or potential investors in EQT and/or former midstream affiliates, EQGP Holdings, LP ("EQGP"), EQM Midstream Partners, LP ("EQM"), and Rice Midstream Partners LP ("RMP"), in 2018 to discuss operations, strategy, and

5    EQT Corporation - 2019 Proxy Statement    


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other critical items. We believe that our proactive approach to engaging openly with investors on topics such as corporate governance, executive compensation and corporate social responsibility drives increased accountability, improves decision-making and, ultimately, will drive long-term value for our shareholders.

In addition, 2018 marked the ninth consecutive year of shareholder outreach efforts targeting the Company's compensation and governance practices. Feedback from these outreach meetings is provided to the Corporate Governance Committee and the Compensation Committee, as appropriate, for consideration. In 2018, we requested governance and compensation targeted meetings with investors representing approximately 58% of our outstanding shares, met with holders of 16.5% of our outstanding shares, and were told by holders representing another 10% that meetings were unnecessary as they were content with our practices. The Board values our investors' feedback and, indeed, has implemented several changes as a result of feedback received from our shareholder engagement program. We modified certain performance metrics used in our 2018 long-term incentive awards in response to investor input and utilized these performance metrics again in our 2019 long-term incentive awards. In November 2018, we began a refreshment of our Board by adding four new, independent directors to the Board. Finally, in early 2019, we commenced a review of our director tenure and considered whether to further refresh our Board. The following table identifies what we heard from our investors, and how we responded to what we heard:

 
   
   
   
   
    What We Heard...
 


  What We Did...
  


   

Certain investors and shareholder advisory firms were not supportive of our allowing our directors and executive officers to use EQT securities as collateral

Certain investors expressed concern that we did not maintain a compensation recoupment policy

Certain investors and shareholder advisory firms requested greater transparency and detail regarding our short-term incentive plan design

Certain investors expressed concern regarding the impact the Rice Transaction (defined below) could have on incentive compensation payouts to our executive officers for 2017

Certain investors have provided input regarding performance metrics to be used in our long-term incentive program

Interest from our shareholders in our Board adopting a universal proxy card for the 2019 annual meeting

     

Implemented a policy prohibiting the pledging of EQT securities by executive officers and directors

Established a compensation recoupment policy

Included enhanced disclosure regarding our short-term incentive plan, including performance metrics and target ranges

Clarified that the Rice Transaction would not result in any increased payouts under our incentive compensation programs for 2017 as a result of the Rice Transaction

We modified certain performance metrics used in our 2018 long-term incentive awards in response to investor input and utilized these performance metrics again in our 2019 long-term incentive awards

In November 2018, we began a refreshment of our Board by adding four new, independent directors to the Board and continued the further refreshment of our Board through the nomination of three new highly qualified, independent board candidates, further enhancing the Board's effectiveness

Adopted best-in-class governance practice of a universal proxy card for the 2019 annual meeting

   

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Sustainability and Corporate Responsibility

EQT's corporate social responsibility commitments are to operate as a safe, responsible, and accountable corporate citizen. EQT is committed to transparency and helping our shareholders understand the origins, risks, costs, and benefits associated with natural gas development. This also means raising awareness of the significant improvements that have taken place and continuing to ensure safe operations, protect our environment, create jobs, and boost our local and national economy.

Since 2012, EQT has provided fulsome and transparent sustainability and corporate responsibility disclosure in the form of Corporate Social Responsibility or "CSR" Reports. In 2018, EQT received an Environmental, Social and Governance ("ESG") score (which is a measure of a company's disclosure of quantitative and policy-related ESG data) from Bloomberg Finance, L.P., that was over 60% higher than the average score for the members of our 2018 peer group. To learn more about EQT's sustainability efforts, please view our 2018 Corporate Social Responsibility Report on our website, by visiting csr.eqt.com.

EQT Business Highlights

2018 was a transformational year for our company, as we successfully integrated and executed several significant transactions, including:

    The successful integration of the former Rice Energy Inc. ("Rice Energy") business and operations that we acquired in late 2017;

    A comprehensive review process to assess the sum-of-the-parts discount, which evaluated the shareholder value creation opportunity of splitting the production and midstream operations into two stand-alone, publicly traded companies, and the announcement of the Spin-off in February 2018;

    The completion of a series of complex midstream streamlining transactions in July 2018;

    Our Board of Directors conducted a fulsome and rigorous CEO search process that culminated in the selection of Robert J. McNally to serve as the Company's President and Chief Executive Officer, effective upon the closing of the Spin-off; and

    The successful completion of the separation of the production and midstream businesses, and related distribution to the Company's shareholders of shares of Equitrans Midstream Corporation, which is now a stand-alone, publicly traded company (NYSE: ETRN), in November 2018 (the "Spin-off").

The successful completion of the Spin-off transformed EQT into a premier pure-play upstream company with a simplified financial and operational structure. The Company boasts a world-class asset base that is well positioned in the core of the prolific Appalachian Basin and is the largest natural gas producer in the United States.

Also in late 2018, management began building a rigorous, detailed plan to improve volumes, deliver operational efficiencies, and significantly reduce costs to accelerate free cash flow growth and shareholder value creation. We unveiled this plan in early 2019 and we are successfully

7    EQT Corporation - 2019 Proxy Statement    


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executing it, as evidenced by our strong financial performance in the fourth quarter of 2018 and the first quarter of 2019. For example, during the first quarter of 2019:

    Sales volumes exceeded guidance and increased by over 10% compared to the first quarter of 2018 when adjusted for the impact of the Huron and Permian Divestitures (defined below);

    Earnings per share increased by over 100% compared to the first quarter of 2018;

    Income from continuing operations increased by over 100% from the first quarter of 2018;

    Capital expenditures from continuing operations decreased 22% compared to the first quarter of 2018; and

    We remained on-target to achieve $150 million of cost savings in 2019, including $50 million identified as part of the "Target 10%" initiative.

The above information is described more fully in the Company's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2019, which we filed with the SEC on April 25, 2019. We believe these results demonstrate our ability to deliver strong free cash flow growth and manage capital expenditures at levels that achieve or exceed expectations.

The Company achieved a number of other key financial and operational results in 2018, which are described in the Company's 2018 Annual Report, including the following:

    Achieved record annual production sales volumes, including a 68% increase in total sales volumes and a 60% increase in Marcellus sales volumes;

    Completed sales of 2.5 million non-core, net acres in the Huron Play located in Southern Appalachia for net proceeds of approximately $523.6 million and certain non-core Permian Basin assets located in Texas for net proceeds of approximately $56.9 million (the "Huron and Permian Divestitures"), better positioning the Company to focus on core operations; and

    Proved reserves increased 2% in 2018, or 11% when adjusted for the impact of the Huron and Permian Divestitures.

Executive Compensation Highlights

EQT firmly believes in pay for performance. EQT's compensation program is designed to reward its executive officers when the Company achieves strong financial and operational results. For a discussion of the alignment of the named executive officers' compensation with EQT performance, see "Pay for Performance Results" and "Compensation Philosophy" under the caption "Compensation Discussion and Analysis" beginning on page 51 of this proxy statement.

The charts below reflect the fixed versus at-risk performance components of 2018 compensation for Mr. McNally, who was serving as the Chief Executive Officer at the end of 2018, on the one hand, and the other named executive officers who were serving as such at the end of 2018, on the

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other hand. The Company believes the 2018 compensation of its named executive officers is consistent with its commitment to link pay with performance.

GRAPHIC

For additional information regarding EQT's compensation philosophy and the elements of EQT's compensation programs for 2018 and 2019, see the "Compensation Discussion and Analysis" portion of this proxy statement.

Important Dates for 2020 Annual Meeting of Shareholders

    Shareholder proposals submitted for inclusion in EQT's 2020 proxy statement under SEC rules must be submitted in writing and received by EQT's Corporate Secretary on or before January 25, 2020.

    Under EQT's bylaws, shareholder proposals to be presented in person at the 2020 annual meeting of shareholders (but not included in the 2020 proxy statement) must be submitted in writing and received by EQT's Corporate Secretary not earlier than the close of business on March 12, 2020, and not later than the close of business on April 11, 2020.

    Under EQT's bylaws, a shareholder, or group of 20 or fewer shareholders, owning continuously for at least three years 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 EQT's 2020 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 EQT's Corporate Secretary not earlier than December 26, 2019, and not later than the close of business on January 25, 2020, and contain the required information set forth in EQT's bylaws.

For additional information, see "Questions and Answers About the Annual Meeting – When are shareholder proposals due?" on page 18 of this proxy statement.

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EQT CORPORATION
625 Liberty Avenue, Suite 1700
Pittsburgh, PA 15222

PROXY STATEMENT

On or about May 24, 2019, we will mail to our shareholders printed copies of the proxy statement and annual report.


QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

EQT Corporation is soliciting proxies for its 2019 annual meeting of shareholders. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner you direct. This proxy statement and the accompanying materials contain information about the items you will vote on at the annual meeting and about the voting process. We sometimes refer to EQT Corporation in this proxy statement as "EQT," "EQT Corporation," the "Company," "we" or "us."

What items will be voted on at the annual meeting?

Shareholders will vote on the following items if each is properly presented at the annual meeting:

            EQT Board's
Recommendation


  More Information
(Page No.)


    ITEM 1       The election to the Company's Board of Directors of the 12 directors nominated by the Board to serve for one-year terms        FOR Each EQT
Director Nominee
      Page 21    
    ITEM 2       The approval of a non-binding resolution regarding the compensation of the Company's named executive officers for 2018        FOR       Page 114    
    ITEM 3       The approval of the EQT Corporation 2019 Long-Term Incentive Plan        FOR       Page 115    
    ITEM 4       The ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2019        FOR       Page 132    

What are the Board's voting recommendations on each item?

Your Board of Directors recommends that you vote FOR EQT's director nominees listed in Item No. 1, and FOR Items Nos. 2 through 4 using the enclosed GOLD universal proxy card or voting instruction form (the "VIF"). As the Company is using a universal proxy card, which includes the names of all identified director candidates, there is no need to use the white proxy card sent to you by the Rice Group. The Board of Directors urges you not to sign, return or vote any white proxy card that may be sent to you by the Rice Group, even as a protest vote, as only your latest dated proxy card will be counted. If you have previously voted using a white proxy card sent to you by the Rice Group, you can revoke it at any time prior to the annual meeting by voting on the enclosed GOLD universal proxy card. The best way to support the Board's nominees is to vote FOR the Board's nominees on the GOLD universal proxy card and to disregard, and not return, any white proxy card that you may receive from the Rice Group.

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Who is entitled to vote, and how many votes do I have?

You may vote if you held common stock of EQT Corporation at the close of business on May 14, 2019. For each item presented for voting, you have one vote for each share you own.

What is the difference between holding shares as a shareholder of record or as a beneficial owner?

If your shares are registered directly in your name with the Company's transfer agent, Computershare, you are considered the "shareholder of record" of those shares.

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the "beneficial owner" of shares held in "street name." The notice of annual meeting, proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record that is considered the "shareholder of record" of those shares. As the beneficial owner, you have the right to direct your broker, bank or other holder of record in voting your shares by using the VIF included in the mailing, or by following the instructions from the holder of record for voting by telephone or on the Internet. Given the contested nature of the election, if you receive proxy materials from the Rice Group, your broker, bank or other holder of record will not be able to vote your shares with respect to any of the proposals at the annual meeting unless they receive your instructions. Your broker, bank or other holder of record has enclosed a VIF for you to use to direct the broker, bank or other holder of record regarding how to vote your shares. Please instruct your broker, bank or other holder of record how to vote your shares using the voting instruction form you received from them. Please return your completed GOLD universal proxy card or VIF to your broker, bank or other holder of record and contact the person responsible for your account so that your vote can be counted. If your broker, bank, or other nominee permits you to provide voting instructions via the Internet or by telephone, you may vote that way as well.

If you hold restricted shares through the 2014 Long-Term Incentive Plan (the "2014 LTIP"), the administrator of such plan has transferred its voting authority with respect to such restricted shares directly to you and you will be able to vote such shares as if they were registered directly in your name.

If your shares are held through the Employee Savings Plan, see "How do I vote shares held through the Employee Savings Plan?" below for instructions regarding how to vote your shares and the right of the trustee to vote your shares on matters for which it has not received voting instructions.

How do I vote if I am a shareholder of record?

If you are a shareholder of record, you may vote your shares:

    in person by attending the annual meeting;

    by signing, dating and returning the GOLD universal proxy card in the prepaid envelope provided;

    by following the instructions at the Internet site indicated on your GOLD universal proxy card; or

    by following the instructions for telephone voting after calling the number indicated on your GOLD universal proxy card.

Even if you plan to attend the meeting, we encourage you to vote by proxy as soon as possible.

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If the name on the accounts is the same, the shares on your GOLD universal proxy card may represent: (i) shares for which you have a certificate; (ii) shares that you hold in book-entry form; (iii) shares that you have in a dividend reinvestment account of the 2009 Dividend Reinvestment and Stock Purchase Plan, and/or (iv) restricted shares you hold through the 2014 LTIP.

If you vote by submitting your GOLD universal proxy card, your shares will be voted as indicated on your properly completed unrevoked proxy card. If you return your GOLD universal proxy card but do not indicate how your shares should be voted on an item, the shares represented by your properly completed unrevoked GOLD universal proxy card will be voted as recommended by the Board of Directors with respect to such items. If you do not return a properly completed proxy card and do not vote in person, by telephone or on the Internet, your shares will not be voted.

How do I vote if I am a beneficial holder of shares held in "street name"?

If your shares are held by a broker, bank or other holder of record in "street name" (including shares purchased through the 2008 Employee Stock Purchase Plan and its predecessor), you should receive a GOLD universal VIF together with copies of the proxy statement and annual report.

Your broker, bank or other holder of record (or designee thereof) will vote your shares in accordance with the instructions on your returned vote instruction form. You may instruct the holder of record to vote your shares:

    by signing, dating and returning the GOLD universal VIF in the prepaid envelope provided;

    by following the instructions at the Internet site indicated on your GOLD universal VIF; or

    by following the instructions for telephone voting after calling the number indicated on your GOLD universal VIF.

See "Is my vote important and how are the votes counted?" below for the right of brokers, banks and other holders of record to vote on routine matters for which they have not received voting instructions.

Please review your GOLD universal VIF for the date by which your instructions must be received in order for your shares to be voted. You may also vote in person at the meeting if you obtain a legal proxy from your broker, bank or other holder of record and present it to the inspectors of election with your ballot.

How do I vote shares held through the Employee Savings Plan?

If you hold shares through the Employee Savings Plan, you will receive a separate GOLD universal VIF, proxy statement and annual report. The trustee of the Employee Savings Plan will vote your shares in accordance with the instructions on your returned VIF. You may instruct the trustee to vote your shares:

    by completing, signing, dating and returning the GOLD universal VIF in the prepaid envelope provided;

    by following the instructions at the Internet site indicated on your GOLD universal VIF; or

    by following the instructions for telephone voting after calling the number indicated on your GOLD universal VIF.

If you do not return a VIF with respect to your Employee Savings Plan shares, the trustee will vote your shares in proportion to the way other plan participants voted their shares. Please note

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that the VIFs representing your Employee Savings Plan shares indicate an earlier voting cut-off than the proxy cards and VIFs you may have received for your other share accounts. Please review the GOLD universal VIF you receive with respect to your Employee Savings Plan shares for the date by which your instructions must be received in order for your shares to be voted.

Please also note that only the trustee of the Employee Savings Plan may vote your shares on your behalf – you may not vote your Employee Savings Plan shares in person at the annual meeting.

May I change my vote?

If you are a shareholder of record, you may revoke your proxy before polls are closed at the meeting by:

    voting again by submitting a revised proxy card or voting by Internet or telephone, as applicable, on a date later than the prior proxy;

    voting in person at the meeting; or

    notifying the Company's Corporate Secretary in writing that you are revoking your proxy.

Attendance at the annual meeting alone is not sufficient to revoke a prior properly submitted proxy.

If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record.

If you have previously signed a white proxy card sent to you by the Rice Group or otherwise voted according to instructions provided by the Rice Group, you may change your vote by marking, signing, dating and returning the enclosed GOLD universal proxy card in the accompanying postage-paid envelope or by voting by telephone or via the Internet by following the instructions on the GOLD universal proxy card. Submitting a white proxy card sent to you by the Rice Group will revoke votes you have previously made by submitting or following the instructions on the Company's GOLD universal proxy card. Your last validly submitted vote is the vote that will be counted.

What if I receive more than one GOLD universal proxy card and/or VIF?

This means that you have multiple accounts holding EQT shares. These may include: accounts with our transfer agent, shares held by the administrator of our employee stock purchase plan, and accounts with a broker, bank or other holder of record. In order to vote all of the shares held by you in multiple accounts, you will need to vote the shares held in each account separately. Please follow the voting instructions provided on each GOLD universal proxy card to ensure that all of your shares are voted.

What happens if I do not submit voting instructions for a proposal? What is a broker non-vote?

If you properly complete, sign, date and return a GOLD universal proxy card or VIF, your shares will be voted as you specify. If you sign and return a GOLD universal proxy card or VIF, but make no specifications on such proxy card or VIF with respect to a proposal, your shares will be voted in accordance with the recommendations of our Board. If you mark a vote with respect to less than 12 nominees in Proposal 1, your shares will only be voted FOR those nominees you have so marked. If you vote FOR more than 12 nominees, all of your votes on Proposal 1 will be invalid and will not be counted.

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If you are a beneficial owner whose shares are held of record by a broker, bank or other holder of record, you have the right to direct your broker, bank or other holder of record in voting your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker, bank or other holder of record does not have discretionary authority to vote. This is called a "broker non-vote." In these cases, the broker, bank or other holder of record can register your shares as being present at the annual meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under New York Stock Exchange (the "NYSE") rules.

We do not expect there to be broker non-votes. Because the Rice Group has submitted a notice of its intent to nominate directors, the 2019 annual meeting is expected to be the subject of a contested solicitation. Under the rules of the NYSE governing brokers' discretionary authority, if you hold your shares in street name and receive the Rice Group's proxy materials and you do not provide voting instructions, your broker will not have discretionary authority to vote thereon, whether the proposal is considered "routine" or not. In that case your shares will not be counted for purposes of determining the number of shares represented and voted with respect to an individual proposal, and therefore will have no effect on the outcome of the vote on an individual proposal. Therefore, it is very important for you to vote your shares for each proposal.

What is a Universal Proxy Card?

A universal proxy card lists on a single card all candidates nominated by the Board and all candidates nominated by a shareholder and allows shareholders to vote for candidates among all candidates nominated, regardless of who nominated them. Universal proxy cards are widely supported by independent proxy advisors, institutional investors and other independent parties because they enhance voting flexibility for shareholders who cannot or do not wish to attend a meeting or who cannot or do not wish to craft their own form of proxy or equivalent document.

In contrast, a traditional proxy card only lists candidates nominated by either the Board or a shareholder. A shareholder that wants to vote for some directors on each of the Company's and the shareholder's proxy cards cannot do so using one proxy card. If both proxy cards were returned, the second proxy card would cancel out and replace the first. As a practical matter, a traditional proxy card essentially requires shareholders to choose between two slates of candidates.

What happens if I vote for more than 12 nominees for election as director?

You may vote "FOR" up to 12 individuals for election as director in total. If you vote "FOR" more than 12 nominees for election as director, your vote will be considered invalid and will not be counted and shall have no effect on the outcome of the vote on director election. Voting to WITHHOLD with respect to any of the Rice nominees is not the same as voting for the Board's nominees. Please note that Daniel J. Rice IV is listed as a nominee by both your Board and the Rice Group; if you wish to vote FOR Daniel J. Rice IV, you should do so on the GOLD universal proxy card.

Is my vote important and how are the votes counted?

Your vote is very important. Each share of EQT stock that you own as of the close of business on May 14, 2019, the record date for the annual meeting, represents one vote. If you do not vote your shares, you will not have a say in the important issues to be voted on at the meeting. Many of our shareholders do not vote, so the shareholders who do vote may influence the outcome of the proposals in greater proportion than their percentage ownership of the Company.

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At the close of business on the record date for the meeting, EQT Corporation had 255,507,169 shares of common stock outstanding. The following are the voting requirements to elect the 12 nominees to the Board and approve the other proposals presented in this proxy statement and the discretionary authority of brokers, banks or other holders of record with respect to each proposal:

    PROPOSAL

VOTE REQUIRED

BROKER
DISCRETIONARY
VOTING ALLOWED*

Item No. 1

  Election of Directors   The 12 nominees receiving the highest number of FOR votes will be elected.   No

 

 

 

 

 

 

 

Item No. 2

  Approval of a non-binding resolution regarding the compensation of the Company's named executive officers for 2018   Majority of votes cast.   No

 

 

 

 

 

 

 

Item No. 3

  Approval of the EQT Corporation 2019 Long-Term Incentive Plan   Majority of votes cast.   No

 

 

 

 

 

 

 

Item No. 4

  Ratification of Ernst & Young LLP   Majority of votes cast.   No

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*
In light of the nomination notice provided by the Rice Group, we expect the annual meeting to have a contested director election, which means that our majority voting policy would not apply and that banks, brokers and other nominees will not have the discretion to vote for "routine matters," such as the ratification of our independent auditor, with respect to any shares held in accounts to which they have forwarded the Rice Group's proxy materials.

For purposes of the approval of all Items above, abstentions, broker non-votes, if any, and the failure to vote are not votes cast and, accordingly, have no effect on the outcome of such proposals.

If you sign and return a white proxy card sent by the Rice Group, it will cancel any previous vote you may have cast on the GOLD universal proxy card. The best way to support the Board's nominees is to vote FOR the Board's nominees on the GOLD universal proxy card and to disregard, and not return, any white proxy card that you may receive from the Rice Group.

What constitutes a "quorum" for the meeting?

A majority of the outstanding shares, present in person or represented by proxy, constitutes a quorum. A quorum is necessary to conduct business at the annual meeting. You are part of the quorum if you have returned a proxy. Abstentions and broker non-votes, if any, also are counted in determining whether a quorum is present.

How will my shares be voted on other matters not included in this proxy statement that may be presented to the annual meeting?

Since no shareholder has indicated an intention to present any matter not included in this proxy statement to the annual meeting in accordance with the advance notice provision in the Company's bylaws (other than Toby Z. Rice with respect to his notice of intention to nominate seven directors at the annual meeting), the Board is not aware of any other proposals for the meeting. If another

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proposal is properly presented, the persons named as proxies will vote your returned proxy in their discretion.

Who can attend the annual meeting, and how do I obtain an admission ticket?

You may attend the annual meeting if you were a shareholder on May 14, 2019. Seating is limited, will be offered on a "first come, first served" basis and requires an admission ticket. You may also request an admission ticket by writing to the Company's Corporate Secretary. See "How do I contact EQT's Corporate Secretary?" below. If a broker, bank or other holder of record holds your shares, you must include proof of your ownership of EQT stock as of May 14, 2019, such as a copy of your brokerage account statement or a legal proxy, which you can obtain from your broker, bank or other holder of record, and we will send you an admission ticket.

Shareholders must present a form of photo identification, such as a driver's license, in order to be admitted to the annual meeting. No cameras, laptops, recording equipment, other similar electronic devices, signs, placards, briefcases, backpacks, large bags, or packages will be permitted in the annual meeting. The Company reserves the right to deny admittance to any shareholder who attempts to bring any such item into the annual meeting. Small purses are permissible, but they and any bags or packages permitted in the meeting room will be subject to inspection. All security procedures and instructions require strict adherence. By attending the annual meeting, shareholders agree to abide by the agenda and procedures for the annual meeting, copies of which will be distributed to attendees at the meeting.

What happens if the meeting is postponed or adjourned?

If the meeting is postponed or adjourned, your proxy will still be good and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted. See "May I change my vote?" above.

Who pays for the solicitation of proxies by EQT?

We do. We are soliciting proxies primarily by use of the mails. However, we may also solicit proxies in person, by telephone, by facsimile, by courier or by electronic means. To the extent that our directors, officers or other employees participate in this solicitation, they will not receive any compensation for their participation, other than their normal compensation. Innisfree M&A Incorporated ("Innisfree") assists us with the solicitation for a fee not to exceed $1,100,000 plus reasonable out-of-pocket expenses. Innisfree expects that approximately 50 of its employees will assist in the solicitation of proxies. In addition, Innisfree and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement. We also reimburse brokerage firms and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to shareholders and obtaining their proxies.

We estimate that our additional out-of-pocket expenses beyond those normally associated with soliciting proxies for the 2019 annual meeting and incurred in connection with preparing for a potential contested solicitation of proxies will be approximately $14,000,000 in the aggregate, of which approximately $3,000,000 has been spent to date. Such additional solicitation costs are expected to include the fees incurred to retain Innisfree as the Company's proxy solicitor, as discussed above, fees of outside legal and public relations advisors, investment bankers and other consultants to advise the Company in connection with a possible contested solicitation of proxies, increased mailing costs, such as the costs of additional mailings of solicitation materials to shareholders, including printing costs, mailing costs and the reimbursement of reasonable expenses of banks, brokerage houses and other agents incurred in forwarding solicitation materials to beneficial owners, as described above, and the costs of retaining an independent inspector of election.

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Additional information about persons who are participants in this proxy solicitation is set forth in Appendix F and Appendix G.

May I nominate someone to be a director of EQT?

Shareholders may either nominate individuals to serve as directors at the annual meeting or recommend individuals as possible director-nominees to the Corporate Governance Committee of the Board of Directors to consider in its normal course.

If you are a shareholder entitled to vote at an annual meeting, you may present at the meeting the nomination of one or more persons for election as a director of EQT Corporation. To do this, you must send advance written notice to the Company's Corporate Secretary. See "How do I contact EQT's Corporate Secretary?" below. According to our bylaws, we must receive notice of nominations for the 2020 annual meeting not earlier than the close of business on March 12, 2020 (i.e., the 120th day prior to July 10, 2020, the one-year anniversary of this year's annual meeting), and not later than the close of business on April 11, 2020 (i.e., the 90th day prior to July 10, 2020). For additional information, see "Corporate Governance and Board Matters – Director Nominations" on page 36 of this proxy statement.

In addition, a shareholder, or group of 20 or fewer shareholders, owning continuously for at least three years 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 EQT's 2020 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 EQT's Corporate Secretary not earlier than December 26, 2019, and not later than the close of business on January 25, 2020 and contain the required information set forth in EQT's bylaws. For additional information, see "Corporate Governance and Board Matters – Director Nominations" on page 36 of this proxy statement.

In addition, the Board's Corporate Governance Committee will consider candidates recommended by the Company's shareholders. If the Corporate Governance Committee determines to nominate as a director an individual recommended by a shareholder, then the recommended individual will be included on the Company's slate for the next annual meeting proxy statement. Shareholders should send their recommendations to the Corporate Governance Committee Chair by addressing the recommendation to the Company's Corporate Secretary. The Corporate Secretary must receive any recommendations as far in advance of the annual meeting of shareholders as possible in order to provide sufficient time for the Corporate Governance Committee to consider the recommendation.

Any notice or recommendation provided by the nominating shareholder must include an original irrevocable conditional resignation signed by each proposed nominee, as well as certain information about the person or persons nominated and the nominating shareholder (see "Director Nominations" under the caption "Corporate Governance and Board Matters" below for details). For additional information, contact the Corporate Secretary.

Has the Company received notice from any shareholders that they are intending to nominate director candidates at the 2019 annual meeting?

Yes. Toby Z. Rice has notified the Company of his intent to nominate a slate of nine nominees (which he has reduced to seven nominees) for election as directors at the 2019 annual meeting in opposition to the nominees recommended by our Board. Our Board does not endorse the Rice nominee slate and the independent members of our Board unanimously recommend that you vote FOR the election of each of the nominees proposed by your Board by using the enclosed GOLD universal proxy card. Voting to WITHHOLD with respect to any of the Rice nominees is not the

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same as voting for the Board's nominees. As the Company is using a "universal" proxy card containing all of the Company nominees as well as the Rice nominees, there is no need to use any other proxy card regardless of how you wish to vote. The Board strongly urges you not to sign or return any white proxy card sent to you by the Rice Group.

When are shareholder proposals due?

Under SEC rules, eligible shareholders may submit proposals for inclusion in the proxy statement for our 2020 annual meeting. Shareholder proposals must be submitted in writing and must be received by the Company's Corporate Secretary on or before January 25, 2020 for them to be considered for inclusion in the 2020 proxy statement. See "How do I contact EQT's Corporate Secretary?" above.

Under our bylaws, you may present proposals in person at the 2020 annual meeting, in addition to proposals that will be included in our proxy statement, if you are a shareholder entitled to vote and comply with the following procedures. The Corporate Secretary must receive such proposals to be presented not earlier than the close of business on March 12, 2020 (i.e., the 120th day prior to July 10, 2020, the one-year anniversary of this year's annual meeting), and not later than the close of business on April 11, 2020 (i.e., the 90th day prior to July 10, 2020). Proposals received outside that time period, including any proposal nominating a person as a director, may not be presented at the 2020 annual meeting. All proposals must be accompanied by the information required by Section 1.09 of our bylaws (a copy of which will be provided to any shareholder upon written request to the Corporate Secretary).

Shareholder proposals to recommend an individual to serve as a director of the Company are discussed in the section "Director Nominations" under the caption "Corporate Governance and Board Matters."

In addition, pursuant to our bylaws, a shareholder, or group of 20 or fewer shareholders may nominate and include in EQT's 2020 proxy statement director nominees, provided that such nominations are submitted in writing and received by EQT's Corporate Secretary not earlier than December 26, 2019, and not later than the close of business on January 25, 2020. For additional information, see "Corporate Governance and Board Matters – Director Nominations" on page 36 of this proxy statement.

How do I contact EQT's Corporate Secretary?

You may contact the Company's Corporate Secretary by sending correspondence to: 625 Liberty Avenue, Suite 1700, Pittsburgh, Pennsylvania 15222, Attn: Corporate Secretary.

Who do I contact if I have questions about the annual meeting or need help in voting my shares?

Please contact the firm assisting us with the solicitation of proxies, Innisfree M&A Incorporated, toll-free at 1(877) 687-1866. Banks and brokers may call collect at 1(212) 750-5833.

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BACKGROUND OF THE SOLICITATION

Over the last two years, the Company has undergone a significant transformation. In 2017, we completed the acquisition of Rice Energy. In addition to creating the largest natural gas producer in North America, this transaction accelerated the maturation of both our upstream and midstream businesses, provided scale that significantly enhanced our optionality and facilitated the later Spin-off. In the meanwhile, the Company also completed several midstream simplification transactions in 2018 that helped to facilitate the Spin-off.

On November 12, 2018, the Company announced that it had completed the Spin-off of Equitrans Midstream Corporation. Upon completion of the Spin-off, new individuals were appointed as the Company's Chief Executive Officer and Chief Financial Officer (in addition to new individuals having been appointed in October 2018 as the Company's Head of Production, Head of Investor Relations and General Counsel). In addition, five new directors were appointed to EQT's Board of Directors upon completion of the Spin-off.

Between the completion of the Spin-off and early December 2018, Mr. Toby Z. Rice had several discussions with Mr. Robert J. McNally, the President and Chief Executive Officer of the Company, and Mr. James E. Rohr, the Chairman of the Board of Directors of the Company. During this time, Mr. Rice stated that he desired to become the Chief Operating Officer of the Company, and Mr. McNally informed him that he would discuss this with the Board.

On December 4, 2018, the Board established the Operating and Capital Efficiency Committee of the Board, tasked with an ongoing review of the Company's operations and capital deployment.

On December 10, 2018, while the Board was considering Mr. Toby Z. Rice's request and before it had the opportunity to fully review the request and respond to the same, Mr. Toby Z. Rice and his brother, Derek A. Rice, sent a public letter to the Board stating that they had a plan to generate an incremental $400 to $600 million of pre-tax free cash flow per year above EQT's then-current plans. This letter also proposed to insert Mr. Toby Z. Rice into the EQT organization with proper authority and support to oversee operations.

On December 14, 2018, at Mr. McNally's request, Mr. Toby Z. Rice met with Mr. McNally at the Duquesne Club in Pittsburgh. Mr. McNally, following consultation with members of the Board and based on Mr. Rice's previous indication that he wanted to work with Mr. McNally on improving operations at EQT, had sought to discuss Mr. Rice undertaking an operational role with respect to the Company either as an executive or a consultant. However, the meeting was much shorter than anticipated – Mr. Rice was silent as Mr. McNally spoke about the opportunity at EQT; Mr. Rice declared that he wanted to be the CEO; and when Mr. McNally asked Mr. Rice about the previous suggestion that they could work together, Mr. Rice stated that on further reflection he had determined that he was only interested in replacing Mr. McNally as the CEO and no longer interested in any other role with respect to EQT. Mr. Rice also indicated that he would no longer discuss the issue with Mr. McNally and instead only wanted to speak with Mr. Rohr.

On January 15, 2019, at the invitation of the Board, Mr. Toby Z. Rice made a presentation to the Board regarding his plans for the Company. The Board invited Mr. Toby Z. Rice to present because the Company was in the process of preparing a revised operational plan. Specifically, the Board was interested whether Mr. Rice had ideas that could improve upon the Company's own plans. Derek Rice and Kyle Derham also attended as guests, and Daniel J. Rice IV was present as a member of the EQT Board. The Board found: (i) the presentation lacking in new thought, (ii) that certain of the assumptions underlying the numbers had insufficient foundation upon question, and (iii) that Mr. Toby Z. Rice was unable to answer several of the Board's questions

    EQT Corporation - 2019 Proxy Statement    19


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with respect to the presentation, either avoiding them and/or asking Derek, Kyle or Daniel to respond from their chairs in his stead. The presentation both disappointed the Board and raised serious concerns as to whether Mr. Toby Z. Rice had the depth of knowledge necessary to be an operating executive without the support of his brothers. Furthermore, Mr. Rice's demeanor during the presentation and otherwise in the course of engagement with the Company raised questions as to whether he had the maturity to lead a large, professional, non-family business.

On January 22, 2019, the Company disclosed its 2019 capital expenditure forecast and actions to enhance shareholder value, including a search for an external COO and the establishment of the Operating and Capital Efficiency Committee of the Board. The Company also disclosed a five-year financial and operating plan providing for substantially increased adjusted free cash flow, as well as the "Target 10%" initiative to further increase adjusted free cash flow. The Company also discussed why the Company believed that the Rices' claims did not correspond to the facts, and would not result in incremental free cash flow relative to the EQT plan.

That same day, the independent members of the Board sent a letter to Toby and Derek Rice stating that there were a number of ideas that the Rices had presented that resonated with the directors, such as the discussion of free cash flow (which, frankly, were already reflected in the Company's revised plan announced that day). The letter also noted, however, that the presentation lacked what the Board believed constituted real plans and details. While noting that the Board had questions about Mr. Toby Z. Rice's fitness for leadership as CEO and a member of the Board, the independent directors also invited Mr. Toby Z. Rice to participate as a candidate in the search for a COO.

On March 7, 2019, after an extended and thorough search, the Company announced the appointment of Gary Gould as Executive Vice President and Chief Operating Officer, effective upon the commencement of his employment with EQT in April 2019. Mr. Gould has more than three decades of relevant industry experience, including direct experience in the Marcellus basin as an operating executive. He most recently served as senior vice president, production and resource development at Continental Resources, Inc. Earlier in his career, he held positions at Chesapeake Energy Corporation, Kinder Morgan, Inc., ConocoPhillips, Burlington Resources, Inc. and Exxon Corporation.

On March 21, 2019, Mr. Toby Z. Rice submitted a notice of nomination of nine director candidates to stand for election to the Board at the 2019 annual meeting of shareholders.

On March 25, 2019, the Company released an investor presentation further detailing its ongoing strategic plan to drive cost reductions across the business and generate sustainable free cash flow growth. The Company stated that it had already implemented cost saving actions that reduced annual cash costs by approximately $150 million. In addition, the Company stated that it anticipates generating adjusted free cash flow of approximately $300 to $400 million in 2019 and $2.9 billion over the next five years, up from the $2.7 billion announced in January, with the Target 10% initiative providing incremental upside. The Target 10% initiative aims to reduce cash costs by 10%, with continued successful execution of this initiative expected to yield cost savings of $800 million over the next five years, $250 million of which has already been identified.

On April 25, 2019, the Company issued a press release and updated analyst presentation disclosing its first quarter earnings results, which included generating $171 million in adjusted free cash flow (a non-GAAP financial measure – see Appendix C for definition and reconciliation) and highlighting continued progress towards its business objectives laid out on January 22, 2019.

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ITEM NO. 1 – ELECTION OF DIRECTORS

(Item No. 1 on the proxy card)

The Board of Directors recommends a vote FOR each nominee proposed by the Board of Directors. The Board and the Corporate Governance Committee believe that EQT's 12 director nominees possess the necessary qualifications and experiences to provide quality advice and counsel to the Company's management and effectively oversee the business and the long-term interests of shareholders.

Directors are elected for one-year terms. Notwithstanding the expiration date of his or her term, each director holds office until his or her successor is elected and qualified; provided, however, each director has agreed to resign the day following the annual meeting date immediately following his or her 74th birthday.

The Board of Directors consists of 12 members as of the date this proxy statement was filed with the SEC. The terms of all 12 directors expire at the 2019 annual meeting. Messrs. Cary, Rohr and Todd are not standing for reelection at the 2019 annual meeting. Mses. Carrig and Mitchell and Mr. McManus have been nominated to serve, along with EQT's other director nominees, for a term of one year to expire at the 2020 annual meeting. All of EQT's director nominees (other than Mr. McNally and Mr. Rice) are independent under NYSE corporate governance rules (please see "Independence and Related Person Transactions" below for more information).

The persons named as proxies will vote according to your directions. If no direction is made with respect to a proposal, the persons named as proxies will vote in accordance with the Company's recommendations on such proposal. The 12 nominees for election proposed by EQT's Board have agreed to serve if elected, and the Board has no reason to believe that such nominees will be unavailable to serve. In the event that any of such nominees are unable or decline to serve as a director at the time of the annual meeting, then the persons named as proxies intend to vote for substitute nominees proposed by the Board, unless the Board decides to reduce the number of directors. If any substitute nominees are so designated, we will file an amended proxy statement or additional soliciting material that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the amended proxy statement or additional soliciting material and to serve as directors if elected, and includes certain biographical and other information about such nominees required by the applicable rules promulgated by the SEC.

The Rice Group has notified the Company of its intention to nominate a slate of nine nominees (which has been reduced to seven nominees) for election to the Board of Directors at the 2019 annual meeting. As a result, the election of directors is considered a contested election as defined in our bylaws, and the 12 nominees receiving the highest number of FOR votes will be elected. Votes may not be cumulated.

The Board believes that election of the Rice nominee slate would immediately jeopardize the value of your investment by installing their friends in a highly destabilizing transition for our shareholders and employees. It would be destabilizing because the Rice Team has repeatedly made public and private statements indicating that they plan to replace up to 15 of the Company's department heads with individuals from the former Rice Energy. The Board notes that the former department heads of Rice Energy include Toby Rice's wife and his college baseball coach, and that all three of Toby Rice's brothers were Rice Energy employees. In addition, four of the Rice nominees served on the Rice Energy board, and at least one has a relative who was employed by Rice Energy.

The Board does NOT endorse the Rice nominee slate and the independent members of our Board unanimously recommends that you vote FOR the election of each of the nominees proposed by the

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Board. Our Board strongly urges you NOT to sign or return the white proxy card sent to you by the Rice Group. If you have previously submitted a proxy card sent to you by the Rice Group, you can revoke that proxy and vote for our Board's nominees and on the other matters to be voted on at the 2019 annual meeting by using the enclosed GOLD universal proxy card.

In addition to the information set forth below, Appendix F sets forth information relating to the Company's directors, the Board's nominees for election as directors and certain of the Company's officers who are considered "participants" in our solicitation under the rules of the SEC by reason of their position as directors, nominees or because they will be soliciting proxies on our behalf, and Appendix G sets forth information relating to the Rice nominees (other than Daniel J. Rice IV) who are considered ``participants" in our solicitation under the rules of the SEC by reason of their position as nominees named on the Company's universal proxy card.

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


Nominees to Serve for a One-Year Term Expiring in 2020
CORPORATE GOVERNANCE AND BOARD MATTERS

Directors            
    Philip G. Behrman, Ph.D.   Age 68   Director since
July 2008
GRAPHIC  
Former Senior Vice President, Worldwide Exploration, Marathon Oil Corporation (a publicly traded integrated energy company), October 2000 through July 2008.

Member of the Audit Committee, Operating and Capital Efficiency Committee and the Public Policy and Corporate Responsibility Committee.

Qualifications.    Through his more than 40 years of energy industry experience, including substantial experience in the exploration and production business, Dr. Behrman brings valuable perspectives with respect to the Company's health, environmental and safety activities, reserves estimation, strategic planning, and operations. In addition to his significant technical industry expertise, Dr. Behrman also brings extensive business and senior management experience to the Board, having served in various technical/management/executive positions with four major energy companies throughout his career.

 

    Janet L. Carrig   Age 61    
GRAPHIC  
Former Senior Vice President, General Counsel and Corporate Secretary of ConocoPhillips (world's largest independent E&P company) from 2007 through 2018, serving as Deputy General Counsel and Corporate Secretary from 2006 through 2007. From 2004 through 2006, she was a Partner at Zelle, Hofmann, Voelbel, Mason & Gette P.C. From 2003 through 2004, Ms. Carrig served as Senior Vice President, Chief Administrative Officer and Chief Compliance Officer of Kmart Corporation, and was Executive Vice President – Corporate Development, General Counsel and Secretary of Kellogg Company from 1999 through 2003. She has a long history of fiduciary responsibility to a wide range of institutional investors and has served as Trustee of Columbia Funds Series Trust I and Columbia Funds Variable Insurance Trust and predecessors since 1996.

Qualifications.    Ms. Carrig brings extensive legal and corporate governance experience, having served as general counsel to Fortune 100 and Fortune 300 companies for over 20 years. Ms. Carrig brings to the Board extensive executive leadership experience, substantial legal, regulatory and governance expertise and a strong E&P industry background, having served for over a decade as general counsel of ConocoPhillips. Ms. Carrig's corporate and legal career, and her prior E&P industry experience, uniquely position her to provide leadership to the Board in legal affairs and corporate governance.

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    Christina A. Cassotis   Age 54   Director since
November 2018
GRAPHIC  
Chief Executive Officer, Allegheny County Airport Authority, since 2015. Managing Officer, ICF International, Inc., a global commercial aviation consulting firm, 2007 through 2014. Ms. Cassotis has served as a director of S&T Bancorp,  Inc. (S&T Bank) (a publicly traded financial services company) since 2017, a member of the board of directors for Visit Pittsburgh, and a member of the International Aviation Women's Association.

Member of the Corporate Governance Committee and the Public Policy and Corporate Responsibility Committee.

Qualifications.    As the leader of a global commercial aviation consulting firm and Chief Executive Officer of the Allegheny County Airport Authority (manages the Allegheny County airport system, including Pittsburgh International Airport, one of the few airports in the U.S. where natural gas drilling is taking place), Ms. Cassotis brings to the Board significant experience in government affairs, public relations and safety and risk management. Ms. Cassotis has demonstrated that she is a strong, decisive, and strategic leader, bringing extensive experience in assessing the complex relationship between organizations and their competitive operating environments. As an innovative leader, she has experience directing necessary change through organizations, by driving growth and delivering value. Ms. Cassotis is also able to draw on her experience serving as a director of another public company board.

 

    William M. Lambert   Age 61   Director since
November 2018
GRAPHIC  
Non-Executive Chairman of the Board, MSA Safety, Inc. (a publicly traded safety products manufacturer), since June 2018; Chairman of the Board, MSA Safety, Inc. (MSA), 2015 through June 2018; and President and Chief Executive Officer, MSA, from 2008 through June 2018. Mr. Lambert has served as a director of MSA since 2007 and as a director of Kennametal, Inc. (publicly-traded tooling and industrial materials manufacturer), serving as Chair on the board's Audit Committee and a member of the Nominating and Corporate Governance Committees, since 2016.

Member of the Audit Committee and the Management Development and Compensation Committee.

Qualifications.    Mr. Lambert has extensive executive leadership experience, having served as President and Chief Executive Officer of MSA for approximately 10 years. Mr. Lambert's experience running MSA, a global leader in the development, manufacture and supply of safety products, including safety products used by the natural gas industry, make him uniquely positioned to offer meaningful oversight of the Company's safety culture and operations. Mr. Lambert is a National Association of Corporate Directors Board Leadership Fellow. Additionally, Mr. Lambert brings extensive experience in business strategy, product development, marketing and finance. Mr. Lambert is also able to draw on his governance and industrial experience serving as a director of two other major public companies, as well as public policy experience serving for more than a decade as a director and executive committee member on major industrial trade associations.

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    Gerald F. MacCleary   Age 65   Director since
November 2018
GRAPHIC  
Chief Executive Officer and Chairman, Covestro LLC (formerly Bayer Material Science), since 2018; President of Covestro LLC, 2012 through 2017; and Senior Vice President, Polyurethanes, North America, 2004 through 2017. Mr. MacCleary serves as Chairman of the American Chemistry Council's Board of Directors, as well as a director on several industry boards, including the National Association of Manufacturers and on the Executive Committee for the Society of Chemical Industry.

Member of the Audit Committee.

Qualifications.    Mr. MacCleary has extensive executive leadership experience, most recently serving as the Chief Executive Officer and Chairman of Covestro, LLC. In this role, he leads Covestro's North American operations and has responsibility for the region's corporate service functions, including communications, human resources, legal, accounting, information technology and supply chain. Mr. MacCleary pushed for higher standards in sustainability, both at Covestro and in the broader chemical industry where health, safety and environmental performance is paramount. Under his leadership, Covestro LLC received the industry's Responsible Care Product Safety Award four consecutive years. He is also a leader in the chemical industry, with expertise in sales, marketing, general management and strategic leadership. Mr. MacCleary has a strong financial background, having worked as an accountant early in his career, and has experience navigating the complexities of a commodities business in a highly regulated industry.

 

    James T. McManus II   Age 60    
GRAPHIC  
Former Chairman, Chief Executive Officer and President, Energen Corporation (a publicly traded E&P company focused on the Permian Basin that was acquired by Diamondback Energy, Inc. in 2018), 2008 through 2018; Chief Executive Officer and President, Energen Corporation ("Energen"), 2007; President and Chief Operating Officer, Energen, 2006 to 2007; President and Chief Operating Officer of Energen's E&P subsidiary, Energen Resources, 1997 through 2006. Beginning in 2014, Mr. McManus served as a director on the board of Questar Corporation ("Questar"), a natural gas focused energy company, until the acquisition of Questar by Dominion Resources, Inc. in 2016 for approximately $4.4 billion, plus assumed debt.

Qualifications.    Mr. McManus' long career in the industry and experience as Chairman, President and Chief Executive Officer of Energen, a publicly traded E&P company focused on drilling and development of high-quality acreage in the Permian Basin, equips him with substantial executive leadership, operations and M&A experience. Mr. McManus led Energen as Chairman, President and CEO for over a decade preceding the company's successful merger with Diamondback Energy, Inc. in 2018, a transaction that valued Energen at approximately $9.2 billion. Mr. McManus has prior experience serving on numerous industry boards, including the Independent Producers Association of America, the American Exploration Production Council, and the National Petroleum Council. Mr. McManus also possesses public company board experience and strong financial and accounting experience, having been at PricewaterhouseCoopers early in his career. Mr. McManus' strong industry, leadership, and operations experience will enable him to provide valuable insights to the Board.

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    Robert J. McNally   Age 48   Director since
November 2018
GRAPHIC  
President and Chief Executive Officer, EQT, since November 2018; Senior Vice President and Chief Financial Officer, EQT, March 2016 through November 2018; director and Senior Vice President and Chief Financial Officer of the general partners of EQM and EQGP, March 2016 through October 2018; director and Senior Vice President and Chief Financial Officer of the general partner of RMP from November 2017 to July 2018. Former Executive Vice President and Chief Financial Officer, Precision Drilling Corporation (a publicly traded Calgary-based oil and natural gas contract drilling, completions, and production services provider), July 2010 through March 2016.

Member of the Executive Committee and the Public Policy and Corporate Responsibility Committee.

Qualifications.    Mr. McNally brings extensive business, leadership, management and financial experience to the Board. Mr. McNally has nearly 25 years of experience in the energy sector. He also has a strong capital markets background, which includes oversight of investments in energy technology start-ups at Kenda Capital LLC, an initial public offering while with Warrior Energy Services Corp., and several years of investment banking and M&A advisory experience with Simmons & Company International. Mr. McNally's strong financial and industry experience, along with his deep understanding of the Company's business operations and culture, enable him to provide unique and valuable perspectives on issues facing the Company.

 

    Valerie A. Mitchell   Age 47    
GRAPHIC  
Founding member and Chief Executive Officer, Corterra Energy, since 2016. Vice President, Mid-Continent, Newfield Exploration Company (a publicly traded exploration and production company that was acquired by Encana Corporation in 2019), 2015 through 2016; Vice President, Corporate Development, Newfield Exploration Company ("Newfield"), 2014 through 2015; and General Manager, Mid-Continent, Newfield, 2011 through 2014.

Qualifications.    Ms. Mitchell has a robust background in E&P, having spent the bulk of her career in the U.S. Mid-Continent, and has over 15 years of operational leadership experience. Ms. Mitchell's experience running the Mid-Continent region at Newfield, with over $1 billion in annual investments in SCOOP and STACK drilling, enables her to bring significant insight into efficient growth, development and production of resources plays. Additionally, as a reservoir engineer with direct field experience, Ms. Mitchell brings valuable technical expertise to the Board with respect to operations and reserves.

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    Anita M. Powers   Age 63   Director since
November 2018
GRAPHIC  
Former Executive Vice President of Worldwide Exploration, Occidental Oil and Gas Corporation, 2007 through January 2017; and Vice President, Occidental Petroleum Corporation, 2009 through January 2017. Ms. Powers has served as a director of California Resources Corporation, a publicly traded producer of oil and natural gas, and as a member of its Health, Safety and Environmental Committee since 2017.

Chair of the Operating and Capital Efficiency Committee and a member of the Executive Committee.

Qualifications.    Ms. Powers has more than 36 years of operational experience in the oil and gas industry, having served in various senior roles at Occidental Oil and Gas Corporation, including most recently as Executive Vice President of Worldwide Exploration. Through her extensive industry experience, Ms. Powers brings significant expertise at optimizing the efficiency of operations to drive returns. As a senior geologist, Ms. Powers also brings significant technical expertise to the Board. Ms. Powers is also able to draw on her experience serving as a director of another public company board.

 

    Daniel J. Rice IV   Age 38   Director since
November 2017
GRAPHIC  
Former Chief Executive Officer and director of Rice Energy (oil and gas exploration company acquired by the Company in November 2017), October 2013 through November 2017; Vice President and Chief Financial Officer, October 2008 through September 2013; and Chief Operating Officer, October 2012 through September 2013. Mr. Rice also served as a director and the Chief Executive Officer of Rice Midstream Management LLC, the general partner of RMP from January 2014 to November 2017.

Member of the Public Policy and Corporate Responsibility Committee.

Qualifications.    Mr. Rice has over a decade of experience in the natural gas industry, having most recently served as the Chief Executive Officer of Rice Energy. Mr. Rice's services at Rice Energy provide Mr. Rice with significant executive and operational insight into the Company's production operations generally, and specifically with respect to the assets acquired in the Company's acquisition of Rice Energy. While on the Rice Energy board of directors, Mr. Rice served on its Health, Safety and Environmental Committee. Prior to joining Rice Energy, he served as an investment banker for Tudor Pickering Holt & Co., LLC from February 2008 through October 2008 and as a senior analyst of corporate planning for Transocean Inc. (offshore drilling contractor) from March 2005 through February 2008.

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    Stephen A. Thorington   Age 63   Director since
September 2010
GRAPHIC  
Former Executive Vice President and Chief Financial Officer, Plains Exploration & Production Company (energy company engaged in the upstream oil and gas business) (now part of Freeport-McMoRan Inc.), September 2002 through April 2006. Mr. Thorington served as a director of the general partner of EQGP from April 2015 through November 2018 and a director of the general partner of EQM from February 2018 to November 2018. Mr. Thorington was a director of KMG Chemicals,  Inc. (diversified chemical company), May 2007 through December 2014, at which time he retired from the board at the conclusion of his then current term. Mr. Thorington also was a director of QRE GP, LLC, the general partner of QR Energy, LP (oil and natural gas production master limited partnership) (now part of Breitburn Energy Partners LP), January 2011 through November 2014.

Chair of the Audit Committee and member of the Executive Committee and the Operating and Capital Efficiency Committee.

Qualifications.    Mr. Thorington has significant experience in energy company management, finance and corporate development, as well as natural gas exploration and production. Mr. Thorington has served in a number of senior management positions with energy industry companies and, earlier in his career, held various senior positions within the investment banking industry. Mr. Thorington also has extensive experience on other public company boards, including service as a member of audit, compensation, conflicts and nominating and corporate governance committees. Mr. Thorington is able to draw upon these diverse experiences to provide guidance with respect to accounting matters, financial markets and financing transactions, exploration and production operations and investor relations.

 

    Christine J. Toretti   Age 62   Director since
October 2015
GRAPHIC  
President, Palladio, LLC (consulting company), since 2011. President, The Jack Company (a natural gas production company), 1988 through 2015; and Chairman and Chief Executive Officer, S.W. Jack Drilling Company (privately held land-based drilling company), 1990 through 2010. Ms. Toretti serves as Chairman of the board of directors of S&T Bank and has served as a director since 1984.

Chair of the Public Policy and Corporate Responsibility Committee and member of the Corporate Governance Committee, the Executive Committee and the Operating and Capital Efficiency Committee.

Qualifications.    Ms. Toretti has extensive experience in the natural gas industry having been the Chairman and Chief Executive Officer of a large, privately held, land-based drilling company. Ms. Toretti previously served on the U.S. Secretary of Energy's Advisory Board and as Pennsylvania's representative on the Interstate Oil and Gas Compact Commission. In addition to her significant executive leadership and industry experience, Ms. Toretti also brings experience as a public company director, currently serving as the Chairman of the board of directors of S&T Bank. Ms. Toretti also serves on a number of non-profit boards. Ms. Toretti's leadership skills and industry experience enable her to provide valuable insights into issues facing the Company.

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CORPORATE GOVERNANCE MATTERS

Current Board Composition

Name   Age

Director
Since


Principal Occupation

Independent

Committee
Memberships

Philip G. Behrman, Ph.D.

  68   2008  

Former Senior Vice President, Worldwide Exploration, Marathon Oil Corporation

  X   AC, OCEC, PPC

A. Bray Cary, Jr.

 
70

 

2008

 

President, Cary Communications, Inc.

Senior Advisor, West Virginia Office of the Governor


 

X

 

CGC (Chair), MDCC, EC

Christina A. Cassotis

 
54
 
2018
 

Chief Executive Officer, Allegheny County Airport Authority

 

X

 

CGC, PPC

William M. Lambert

 
61

 

2018

 

Former Chairman, President and Chief Executive Officer, MSA Safety, Inc.

 

X

 

AC, MDCC

Gerald F. MacCleary

 
65
 
2018
 

Chief Executive Officer and Chairman, Covestro LLC (formerly Bayer Material Science)

 

X

 

AC

Robert J. McNally

 
48

 

2018

 

President and Chief Executive Officer, EQT Corporation

 

 

EC, PPC

Anita M. Powers

 
63
 
2018
 

Former Executive Vice President of Worldwide Exploration, Occidental Oil and Gas Corporation

 

X

 

EC, OCEC (Chair)

Daniel J. Rice IV

 
38

 

2017

 

Former CEO, Rice Energy Inc.

 

 

PPC

James E. Rohr (Independent
Chairman)

 
70
 
1996
 

Former Chairman and CEO, The PNC Financial Services Group, Inc.

 

X

 

MDCC, EC (Chair)

Stephen A. Thorington

 
63

 

2010

 

Former Executive Vice President and CFO, Plains Exploration and Production Company

 

X

 

AC (Chair), EC, OCEC

Lee T. Todd, Jr., Ph.D.

 
73
 
2003
 

Former President and Retired Professor of Electrical Engineering, University of Kentucky

 

X

 

CGC, MDCC (Chair), EC

Christine J. Toretti

 
62

 

2015

 

President, Palladio,  LLC

 

X

 

CGC, EC, PPC (Chair), OCEC

 

AC   Audit Committee   MDCC   Management Development and Compensation Committee

CGC

 

Corporate Governance Committee

 

OCEC

 

Operating and Capital Efficiency Committee

EC

 

Executive Committee

 

PPC

 

Public Policy and Corporate Responsibility Committee

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Board Meetings and Committees

In 2018, the Board of Directors held six regular meetings and 10 special meetings. The independent directors met six times in executive session without any officer of the Company present. In 2018, each director attended 75% or more of the total number of meetings of the Board and the committees on which the director served, and overall attendance at such meetings was over 97%. The Company encourages its directors to attend the annual meeting of the shareholders, and it has been their practice to do so. All directors then in office attended the 2018 annual meeting.

The Board has six standing Committees:

    Audit Committee+    
    Management Development and Compensation Committee+    
    Corporate Governance Committee+    
    Operating and Capital Efficiency Committee+    
    Public Policy and Corporate Responsibility Committee    
    Executive Committee    
+
Committee composed entirely of independent directors

The Board may, from time to time, form new committees, disband an existing Committee and delegate additional responsibilities to a committee. The responsibilities of the committees (other than the Executive Committee and the Operating and Capital Efficiency Committee) are set forth in written charters, which are reviewed periodically by the committees and, where appropriate, the Corporate Governance Committee and the Board. All of the charters are available on the Company's website at www.eqt.com by clicking on the "Investors" link on the main page and then on the "Corporate Governance" link followed by the "Charters and Documents" link.

Committees and Current Committee Composition

Below is an overview of our committees as of the date of this proxy statement and a description of their key oversight and focus areas.

Audit Committee

Stephen A. Thorington
Committee Chair
  Meetings Held in 2018: 10

Additional Committee Members:    Philip G. Behrman, Ph.D.; William M. Lambert; and Gerald F. MacCleary

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 and integrity of the Company's financial statements; the qualifications, independence, and performance of the Company's registered public accountants; and the qualifications and performance of the Company's internal audit function. The Committee also oversees the Company's compliance with legal and regulatory requirements, including the Company's code of business conduct and ethics. For additional information regarding the Committee's responsibilities, see "Report of the Audit Committee" and "Board's Role in Risk Oversight" below.

Independence:    Each member of the Audit Committee (i) is independent under the Company's corporate governance guidelines and applicable NYSE listing standards and SEC rules and (ii) is financially literate under the applicable NYSE rules. The Board has determined that each of Messrs. Lambert, MacCleary and Thorington qualifies as an "audit committee financial expert" (as defined under SEC rules). The designation as an audit committee financial expert does not impose upon the members any duties, obligations, or liabilities that are greater than are generally imposed upon them as members of the Audit Committee and the Board. As audit committee financial experts, Messrs. Lambert, MacCleary and Thorington also have accounting or related financial management experience under applicable NYSE listing standards.

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Management Development and Compensation Committee

Lee T. Todd, Jr., Ph.D.
Committee Chair
  Meetings Held in 2018: 12

Additional Committee Members:    A. Bray Cary, Jr., William M. Lambert and James E. Rohr

Primary Responsibilities:    The Management Development and Compensation Committee (the "Compensation Committee") discharges the Board's responsibilities relating to compensation of the Company's executive officers, including determining and approving the Chief Executive Officer's compensation level, based on input from the Corporate Governance Committee and the other independent directors regarding the Chief Executive Officer's performance for the prior year and in light of the goals and objectives established by the Corporate Governance Committee for the upcoming year; reviewing and approving the performance of, and compensation structure for, the Company's executive officers (other than the Chief Executive Officer); and reviewing and approving all compensation plans and employment and severance agreements for executive officers. The Compensation Committee has the sole authority to retain and terminate one or more compensation consultants, independent legal counsel, or other advisors. It may also obtain advice and assistance from internal legal, accounting, human resources, and other advisors. The Compensation Committee oversees and, where required by law, administers the Company's benefit plans, incentive-based compensation plans, and other equity-based plans. The Compensation Committee also reviews the Company's succession plan for all executive officers other than the Chief Executive Officer (whose succession plan is reviewed by the full Board). Pursuant to its Charter, the Compensation Committee has the power to form and delegate authority to subcommittees and to delegate authority to one or more members of the Compensation Committee or to individuals and committees consisting of employees of the Company.

Independence:    Each member of the Compensation Committee is (i) independent under the Company's corporate governance guidelines and applicable NYSE listing standards (including the enhanced independence standards for compensation committee members under the NYSE listing standards); and (ii) a "non-employee director" for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Corporate Governance Committee

A. Bray Cary, Jr.
Committee Chair
  Meetings Held in 2018: 10

Additional Committee Members:    Christina A. Cassotis, Lee T. Todd, Jr., Ph.D. and Christine J. Toretti.

Primary Responsibilities:    The Corporate Governance Committee is responsible for recommending director-nominees for each annual meeting of shareholders, Board Committee membership (including Committee Chairs), and nominees for the Board's Chairman. The Committee oversees the self-assessment process for the Board and its committees and makes recommendations regarding the Board's compensation structure. It also identifies and approves corporate goals and objectives relevant to the Chief Executive Officer's compensation and annually reviews the Chief Executive Officer's performance against such goals and objectives, after receiving input from the Chairman. The Committee also recommends director independence determinations to the Board and reviews related person transactions under the Company's related person transaction approval policy.

Independence:    Each member of the Committee is (i) independent under the Company's corporate governance guidelines and applicable NYSE listing standards (including the enhanced independence standards for compensation committee members under the NYSE listing standards) and (ii) a "non-employee director" for purposes of Rule 16b-3 under the Exchange Act.

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Operating and Capital Efficiency Committee

Anita M. Powers
Committee Chair
  Meetings Held in 2018: 2

Additional Committee Members:    Philip G. Behrman, Ph.D., Stephen A. Thorington and Christine J. Toretti.

Primary Responsibilities:    The Operating and Capital Efficiency Committee was formed by the Board as a new standing committee in December 2018. The Operating and Capital Efficiency Committee consists of four independent directors with significant industry experience and is tasked with an ongoing review of the Company's operations and capital deployment.

Public Policy and Corporate Responsibility Committee

Christine J. Toretti
Committee Chair
  Meetings Held in 2018: 5

Additional Committee Members:    Philip G. Behrman, Ph.D., Christina A. Cassotis, Robert J. McNally and Daniel J. Rice IV.

Primary Responsibilities:    The Public Policy and Corporate Responsibility Committee reviews and provides input and direction to the Company's management and the Board regarding industry, legislative, and regulatory activities of significance to the Company relating to environmental, health, and safety matters; government affairs (including industry and other organizations that express views about legislative and regulatory affairs); and other matters likely to influence the Company's reputation.

Executive Committee

James E. Rohr
Committee Chair
  Meetings Held in 2018: 0

Additional Committee Members:    A. Bray Cary, Jr., Robert J. McNally, Anita M. Powers, Stephen A. Thorington, Lee T. Todd, Jr., Ph.D., and Christine J. Toretti.

Primary Responsibilities:    The Executive Committee has the authority to act in all matters that the full Board may act upon when the Board is not in session, unless limited by a resolution of the Board and except to the extent limited by law.

Compensation Process

Establishing Target Total Direct Compensation

In discharging the Board's responsibilities relating to compensation of the Company's executive officers, the Compensation Committee establishes the target total direct compensation (base salary plus annual and long-term incentives) for executive officers by establishing base salaries and setting long-term and annual incentive targets. When appropriate, the Compensation Committee also reviews and modifies perquisites.

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Establishing and Administering Annual and Long-Term Incentive Programs

The Compensation Committee annually approves plan design, including performance measures and target payout, for annual and long-term incentive programs. These deliberations, which usually start with recommendations from management and involve discussions among management, the Compensation Committee's independent compensation consultant and the Compensation Committee, usually span several meetings before a design is approved. After the end of the performance period for any performance award, the Compensation Committee certifies the levels at which the performance measures were satisfied and approves the amount of incentive award payable to each executive officer.

Delegation of Grant Authority

The Compensation Committee has delegated to Mr. McNally, in his capacity as a director of the Company, the authority to grant a limited number of restricted EQT shares and/or EQT restricted units to:

    newly hired or recently promoted employees on the condition that no award exceeds the 50th percentile of the market long-term incentive compensation target in value, except as may result from an award being rounded-up to the next highest number of shares evenly divisible by 10;

    other employees in recognition of exceptional performance on the condition that such no award exceeds 1,000 shares (provided that the recipient does not participate in the Company's current long-term incentive award program); and

    employees who participate in the Company's educational assistance program, on the condition that no individual award exceeds 500 shares (provided that the recipient does not participate in the Company's current long-term incentive award program).

Mr. McNally may not grant any of these awards to an executive officer of the Company. All such awards must be made on standard terms approved by the Compensation Committee and are reported to the Compensation Committee for informational purposes at the next meeting of the Compensation Committee.

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

Compensation Consultant

The Compensation Committee has the sole authority to hire, terminate, and approve fees for compensation consultants, independent legal counsel, and other advisors as it deems to be necessary to assist in the fulfillment of its responsibilities. During 2018, the Compensation Committee utilized Pay Governance LLC ("Pay Governance") as its independent compensation consultant, and Pay Governance reported directly to the Compensation Committee.

During 2018, Pay Governance provided market data and counsel regarding executive officer compensation programs and practices and also performed benchmarking services for the Corporate Governance Committee related to director compensation for the Company's Board.

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In addition to the executive and director compensation services provided for the Compensation Committee and the Corporate Governance Committee, respectively, during 2018, the representatives of Pay Governance also performed the following services during 2018:

    The Company's management engaged Pay Governance to perform a competitive benchmarking analysis for non-executive officers of the Company (2018 fees totaled $25,973).

The Compensation Committee has considered the services provided by Pay Governance during 2018, as well as Pay Governance's responses to a questionnaire regarding Pay Governance's relationship with the Company and its management, and determined that such services do not compromise Pay Governance's independence as the Compensation Committee's independent compensation consultant.

Role of Senior Management

The Company's senior management has an ongoing dialogue with the Compensation Committee and its independent compensation consultant regarding compensation and plan design. Most ideas originate with management due to its direct involvement in, and knowledge of, the business goals, strategies, experiences and performance of the Company. Management's ideas are reviewed with the independent compensation consultant and frequently modified by the Compensation Committee prior to ultimate adoption. The Compensation Committee engages in active discussions with the Chief Executive Officer concerning: (i) who should participate in programs and at what levels, (ii) which performance measures should be used, (iii) the determination of performance targets, and (iv) whether and to what extent performance measures for the previous year have been achieved. The Chief Executive Officer is advised by the other executive officers of the Company.

We provide additional information regarding the Compensation Committee and our policies and procedures regarding executive compensation, including the role of executive officers in recommending executive compensation, below under the caption "Compensation Discussion and Analysis."

Board Leadership Structure

Currently, the roles of Chairman of the Board and Chief Executive Officer are separate, with Mr. Rohr serving as Chairman of the Board and Mr. McNally serving as EQT's Chief Executive Officer. As described in the Company's corporate governance guidelines, the Board of Directors believes that the functions of the Chairman of the Board are distinct from those of the Chief Executive Officer but that both functions may be effectively performed by the same individual. From time to time, generally in connection with succession planning, the Board considers whether the Chairman of the Board and the Chief Executive Officer should be separate, and if separate, whether the Chairman of the Board should be an outside director or an inside director.

Pursuant to 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. When a Lead Independent Director has been designated, his or her exclusive duties are:

    convening, presiding over, and setting agendas for regularly scheduled and special executive sessions of non-management directors (which typically occur at each regularly scheduled meeting of the Board), including calling a meeting of the independent/non-management directors, if requested by any other director;

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

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

    providing input to the Corporate Governance Committee in connection with the evaluation of the Chief Executive Officer's performance;

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

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

    serving as the Chair of the Executive Committee.

When in office, the independent Chairman's or Lead Independent Director's term is one year, but an individual may serve multiple consecutive terms upon recommendation of the Corporate Governance Committee and approval of the Board.

Board's Role in Risk Oversight

The Company's corporate governance guidelines provide that the Board of Directors is responsible for reviewing the process for assessing the major risks facing the Company and the options for their mitigation. The Board executes on this oversight responsibility in a variety of ways, including:

 

  THE BOARD

 

 

Oversees our risk management policies and practices and reviews options for risk mitigation;

Performs an annual review of the Company's major risks;

Addresses major risks with management via presentations (initiated by management or requested by the Board) throughout the year; and

Delegates oversight for certain risks to the Board committees, as appropriate.

   
 
   
   
   
   
   

 

  Audit Committee

    Compensation Committee

 

 

Responsible for reviewing and discussing with management the Company's major financial risk exposures and the actions management has taken to monitor and control such exposures.

Reviews the performance of our independent auditors (and their independence) and our internal audit department.

         

Reviews and oversees the risk assessment related to EQT's compensation programs, and reports the results to the Board.

Periodically reviews and makes recommendations regarding such of the Company's Tier 1 risks as may be delegated to the Compensation Committee by the Board.

   

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  Corporate Governance Committee

    Public Policy and Corporate Responsibility Committee

 

 

Reviews and advises the Board regarding material corporate governance-related risks.

Ensures that our Board is composed of capable individuals who provide appropriate oversight and insight to our executive management.

         

Oversees policies and practices relating to environmental, health and safety matters.

Reviews procedures for identifying, assessing, monitoring and managing the principal risks associated with health, safety, environment, and reputational risk matters.

   

Enterprise Risk Committee

The Company primarily manages enterprise risk through an Enterprise Risk Committee, which is composed of certain executive officers, including our President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, and General Counsel and Senior Vice President, Government Affairs, as well as business unit and functional leaders. The Enterprise Risk Committee meets periodically throughout the year to review, prioritize and address the Company's major risk exposures and to consider new or emerging risks. The Director, Enterprise Risk and Compliance reports the results of the risk assessment annually to the Board of Directors. The Board reviews and assesses the report of the Director, Enterprise Risk and Compliance and determines whether any further action is required.

Director Nominations

General Process for Director Nominations

The responsibilities of the Corporate Governance Committee include identifying and recommending to the Board the requisite skills and characteristics to be found in individuals qualified to serve as members of the Board and recommending to the Board the director nominees for each annual meeting of shareholders. The Corporate Governance Committee typically considers new nominees for the Board in the context of a vacancy on the Board resulting from resignation or retirement of a director or to fill a skill need identified by the Board. The Corporate Governance Committee has historically used third-party search firms to assist it in identifying potential director candidates. Director candidates have also been identified by senior management and members of the Board considering individuals both within and external to their respective networks. The Company agreed to nominate Daniel J. Rice IV at the 2018 annual meeting of shareholders as a director pursuant to the Agreement and Plan of Merger entered into in connection with the 2017 acquisition of Rice Energy Inc. (the "Rice Transaction").

As set forth in the Corporate Governance Committee's charter, it will consider submissions from shareholders in making its recommendation. Any shareholder desiring to recommend an individual to serve as a director of the Company should submit the following information to the Corporate Governance Committee Chair, care of the Corporate Secretary, no earlier than the close of business on the 120th day and no later than the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting:

    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 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

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      Corporate Secretary, and (iv) the nominee's executed irrevocable conditional resignation letter.

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

Additionally, as set forth in Section 1.11 of the Company's bylaws, a shareholder, or group of 20 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 EQT'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 EQT's Corporate Secretary not earlier than the close of business on the 150th day and not later than the close of business on the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the preceding year's annual meeting of shareholders 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 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 that the nominee consents to being named in the Company's proxy statement and form of proxy card as a nominee and to serving as a director of the Company if elected, 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 his or her service as a member of the Board would not violate any applicable law, rule or regulation, or the NYSE listing standards.

Other than the nomination of directors by Toby Z. Rice described in this proxy statement, the Company did not receive any nominations from any shareholders for the 2019 annual meeting.

In evaluating individuals identified as possible director-nominees, whether the source of the possible nominee is another director, a member of management, a shareholder or otherwise, the Corporate Governance Committee assesses the experience and personal characteristics of the possible nominee against the guidelines identified below. Possible nominees satisfying the guidelines are then further evaluated to identify, in the judgment of the Corporate Governance Committee, the best match for the Board. The Corporate Governance Committee retains the

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right to modify the guidelines, including the criteria for evaluating the qualifications of potential nominees for election to the Board as set forth therein, from time to time.

 
   
   
   
   

 

  Individual
Qualifications


 

Possesses integrity, competence, insight, creativity, and dedication together with the ability to work with colleagues while challenging one another to achieve superior performance

Has attained prominent position in his or her field of endeavor

Possesses broad business experience

Has ability to exercise sound business judgment

Is able to draw on his or her past experience relative to significant issues facing the Company

Has experience in the Company's industry or in another industry or endeavor with practical application to the Company's needs

Has sufficient time and dedication for preparation as well as participation in Board and Committee deliberations

Has no conflict of interest

Meets such standards of independence and financial knowledge as may be required or desirable

Possesses attributes deemed to be appropriate given the then current needs of the Board

 
       

 

  Composition of the
Board as a Whole


 

A diversity of background, perspective, and skills related to the Company's business

A diversity of race, gender, and age

 
       

Consideration of Diversity

The Board does not have a specific diversity policy, but fully appreciates the value of Board diversity. Diversity is important because a variety of points of view improves the quality of dialogue, contributes to a more effective decision-making process and enhances overall culture in the boardroom.

In evaluating candidates for Board membership, the Board and the Corporate Governance Committee consider many factors based on the specific needs of the business and what is in the best interests of the Company's shareholders. This includes diversity of professional experience, race, ethnicity, gender, age and cultural background. In addition, the Board and the Corporate Governance Committee focus on how the experiences and skill sets of each director nominee complement those of fellow director nominees to create a balanced Board with diverse viewpoints and deep expertise.

The Board believes that its nominees possess individual qualifications consistent with the guidelines set forth above. In addition to the specific individual director qualifications identified under the caption "Item No. 1 – Election of Directors" above, the Board believes that its nominees offer insightful and creative views and solutions with respect to issues facing the Company. The Board also believes that its nominees will function well together as a group. Finally, the Board believes that its nominees have appropriate diversity consistent with the guidelines set forth above.

The Rice Nominees

The Corporate Governance Committee, together with the Annual Meeting Committee, also evaluated the Rice nominees using the same criteria that they used to evaluate the Board's nominees and concluded that the nominees recommended by the Board in this proxy statement collectively have a superior skill set in light of the needs of the Company.

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Under EQT's Second Amended and Restated Credit Agreement, dated as of July 31, 2017, among EQT, PNC Bank, National Association, as administrative agent, swing line lender and an L/C issuer and the other lenders (the "Credit Agreement"), a change of control would occur thereunder if the Rice nominees (other than Daniel J. Rice IV) become members of the Board unless the current Board approved such nominees. Citing this Credit Agreement provision, Toby Z. Rice requested that the Board approve the Rice nominees. While the Board has approved the Rice nominees solely for purposes of the Credit Agreement, the Board opposes the election of the Rice nominees, believes their election is not in the best interest of the Company's shareholders and recommends that shareholders support the Board's director nominees.

Contacting the Board

You may communicate directly with our Board of Directors (and with independent directors, individually or as a group) by sending an email to presidingdirector@eqt.com. You may also write to our independent Chairman, 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 EQT Corporation, 625 Liberty Avenue, Suite 1700, Pittsburgh, Pennsylvania 15222. The Corporate Secretary will open such communications and will promptly deliver such communications to the director or directors (as appropriate) designated therein, unless such communications are junk mail or mass mailings.

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 the Audit Committee, the Management Development and Compensation Committee, the Corporate Governance Committee, and the Public Policy and Corporate Responsibility Committee. The corporate governance page can be found at www.eqt.com, by clicking on the "Investors" link on the main page and then on the "Corporate 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.

EQT's corporate governance policies and practices are compliant with applicable corporate governance requirements:

    The Board of Directors has adopted corporate governance guidelines.

    10 of the 12 nominees for election to the Board are independent of the Company and its management.

    The Board's non-management directors meet periodically in executive session, and the independent Chairman has been identified as the presiding director at all such executive sessions.

    All members of each of the key Board Committees – Audit, Management Development and Compensation, and Corporate Governance – are independent of the Company and its management.

    Each of the key committees has a charter that meets applicable legal requirements and reflects good corporate governance.

    The Board and each of the key committees engage in annual self-assessments, which involve, among other things, reviews of individual director performance.

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      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.

      The Corporate Governance Committee reviews the Company's governance policies and practices periodically and makes recommendations to the Board.

Independence and Related Person Transactions

Director Independence

In accordance with the Company's corporate governance guidelines, a majority of directors at any time will be independent. For a director to be considered an "independent director," the Board must annually determine that he or she has no material relationship with the Company (either directly or as a partner, shareholder, or officer of an organization that has such a relationship with the Company), except as a director. To assist it in determining director independence, the Board established guidelines, which are included in the Company's corporate governance guidelines, that conform to the independence requirements under the NYSE listing standards.

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 set forth in the Company's corporate governance guidelines and is not otherwise a related person transaction (as defined under the caption "Review, Approval or Ratification of Transactions with Related Persons" below) 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.

Based on the independence standards set forth in the Company's corporate governance guidelines, the Board has determined that all of the Company's directors other than Mr. McNally (who is an executive officer of the Company) and Mr. Rice (who the board concluded did not meet the above standards as a result of having served as the chief executive officer of Rice Energy prior to the Rice Transaction and the level of ownership that he and his family have in the Company) have met the above standards and are independent of the Company and its management.

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 equity ownership guidelines for directors.

During the preceding three fiscal years, the Company made no contributions to any tax-exempt organization in which any independent director of the Company is an executive officer.

Review, Approval or Ratification of Transactions with Related Persons

Under the Company's written related person transaction policy, 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 (as defined below). Such determination is based on a review of all facts and circumstances regarding the transaction, including information provided in annual director and

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executive officer questionnaires. Upon determination that a transaction is a Related Person Transaction that has not been approved by the full Board of Directors, the material facts regarding the transaction are reported to the Corporate Governance Committee for its review. The Corporate Governance Committee then 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. 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: (i) 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; (ii) transactions involving compensation and benefits paid to a director for service as a director of the Company; (iii) 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 an employee or executive officer, a director or a beneficial owner of less than 10% of that company's shares, provided that the amount involved does not exceed the greater of $1,000,000 or 2% of the other company's consolidated gross revenue; (iv) 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; (v) transactions where the rates or charges involved are determined by competitive bids; (vi) 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; (vii) transactions involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; and (viii) charitable contributions, grants or endowments by the Company or the Company's charitable foundation to a charitable or non-profit organization, foundation or university in which a Related Person's only relationship is as an employee or a director or trustee, if the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of the recipient's consolidated gross revenue.

The related person transaction policy does not limit or affect the application of the Company's code of business conduct and ethics and related policies, which require directors and executive officers to avoid engaging in any activity or relationship that may interfere, or have the appearance of interfering, with the performance of the directors' or executive officers' duties to the Company. Such policies require all directors and executive officers to report and fully disclose the nature of any proposed conduct or transaction that involves, or could involve, a conflict of interest and to obtain approval before any action is undertaken.

Transactions with Related Persons

Based on information provided by the Company's directors and executive officers and assessments by the Company's management, the Corporate Governance Committee determined that there were no Related Person Transactions in 2018 requiring disclosure in this proxy statement.

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Compensation Committee Interlocks and Insider Participation

During 2018, Dr. Todd and Messrs. Cary, Lambert and Rohr served as members of the Management Development and Compensation Committee. None of the Management Development and Compensation Committee members is a current or former officer or employee of the Company or had any relationship with the Company requiring disclosure. In addition, none of the Company's executive officers served as a member of the board of directors or compensation committee (or similar committee) of another entity, one of whose executive officers served as a member of the Company's Board of Directors or the Management Development and Compensation Committee.

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DIRECTORS' COMPENSATION

Compensation of directors is annually reviewed by the Corporate Governance Committee and approved by the Board. No compensation is paid to employee directors for their service as directors.

In 2018, the Corporate Governance Committee engaged Pay Governance to conduct an annual review of the total compensation for non-employee directors for 2019. Specifically, retainer fees, meeting fees, chairperson premiums, stock-based long-term incentives, and director matching gift benefits were evaluated using, as the competitive benchmark, levels of total compensation paid to directors of:

    the 198 general industry companies that had 2017 revenues and market capitalization similar to that of the Company, which are identified on Appendix A to this "Directors' Compensation" section; and

    the 14 energy industry companies that are identified on Appendix B to the Compensation Discussion and Analysis ("CD&A") section of this proxy statement under the heading "2019 Peer Group – Financial Metrics."

Set forth below is a description of the compensation of the Company's non-employee directors:

Cash Compensation

The structure of the 2018 and 2019 fees is set forth below, and all fees are paid on a quarterly basis.

Compensation Feature

2018

2019

Annual cash retainer – Board member

  $85,000   $80,000

Annual cash retainer – Committee Chair

  Audit: $25,000

All other Committees: $15,000

  Audit: $25,000

Operating and Capital Efficiency: $20,000

All other Committees: $15,000

Annual cash retainer – Committee member (excluding the chair)

  Audit: $10,000

Corporate Governance, Compensation, Public Policy Committees: $5,000

Executive Committee: None

  Audit: $10,000

Operating and Capital Efficiency: $7,500

Corporate Governance, Compensation, Public Policy Committees: $5,000

Executive Committee: None

Meeting fees

  None   None

The members of the special review committee convened to evaluate options for addressing the Company's sum-of-the-parts discount did not receive a retainer for their service on the special review committee.

Equity-Based Compensation

    The Company grants to each non-employee director, on an annual basis, stock units that vest upon award and are payable on a deferred basis under the Company's directors'

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      deferred compensation plans ("deferred stock units"). The 2018 annual grant was 3,430 deferred stock units, which were awarded on January 1, 2018 to each non-employee director serving at that time. Each non-employee director serving on the Board on January 1, 2019 received an award of 9,800 deferred stock units. Each deferred stock unit is equal in value to one share of Company common stock but does not have voting rights. Dividends are credited quarterly in the form of additional deferred stock units. The value of the stock units granted in 2013 and subsequent years will be paid in shares of Company common stock upon termination of service as a director. The value of the stock units granted prior to 2013 will be paid in cash upon termination of service as a director.

    Non-employee directors elected mid-year generally receive an equity grant upon joining the Board equal to the pro rata amount of the then applicable annual grant; as a consequence, on November 13, 2018, each of Mses. Cassotis and Powers and Messrs. Lambert and MacCleary received a grant of 1,420 deferred stock units.

    The non-employee directors are subject to equity ownership guidelines, which require them to hold shares (or share equivalents, including deferred stock units) with a value equal to five times the annual 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 ownership guidelines. Each of the Company's non-employee directors satisfies the equity ownership guidelines giving consideration to the five-year ramp-up period.

Deferred Compensation

    The Company has deferred compensation plans for non-employee directors. In addition to the automatic deferral of stock units awarded, non-employee directors may elect to defer up to 100% of their annual retainers and fees into the 2005 Directors' Deferred Compensation Plan and receive an investment return on the deferred funds as if the funds were invested in Company common stock or permitted mutual funds. Prior to the deferral, plan participants must 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 are distributed in shares of common stock. Distributions are made or, if applicable, commence following termination of service as a director. The directors' deferred compensation accounts are unsecured obligations of the Company. Messrs. Cary, MacCleary and Szydlowski deferred fees under the plan in 2018. The 1999 Directors' Deferred Compensation Plan continues to operate for the sole purpose of administering amounts vested under the plan on or prior to December 31, 2004.

Other

    All directors are eligible to participate in the Matching Gifts Program of the EQT Foundation on the same terms as Company employees. Under this program, the EQT 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.

    Non-employee directors who joined the Board prior to May 25, 1999 may designate a civic, charitable or educational organization as beneficiary of a gift, payable in a lump sum following the death of the director, funded by a life insurance policy purchased by the Company. The proceeds of the life insurance policy (and, therefore, the amount of the gift) approximate the present value of 10 equal annual installments of $50,000. The directors do

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      not receive any financial benefit from this program because the charitable deductions accrue solely to the Company. Mr. Rohr is the only active director entitled to this benefit.

    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.

The table below shows the total 2018 compensation of the Company's non-employee directors:


2018 Directors' Compensation Table

NAME(1)







FEES
EARNED OR
PAID IN CASH
($)(2)







STOCK
AWARDS
($)(3)






ALL OTHER
COMPENSATION
($)(4)



TOTAL
($)

Dr. Behrman

    100,285     195,236     20,440   315,961

Mr. Cary

  105,000   195,236   1,440   301,676

Ms. Cassotis

    12,120     26,355     -   38,475

Mr. Lambert

  12,405   26,355   50,000   88,760

Mr. MacCleary

    12,677     26,355     -   39,032

Ms. Powers

  12,405   26,355   -   38,760

Mr. Rice

    90,000     195,236     44   285,280

Mr. Rohr

  105,000   195,236   3,951   304,187

Mr. Thorington

    110,285     195,236     313,653   619,174

Dr. Todd

  105,000   195,236   52,791   353,027

Ms. Toretti

    92,323     195,236     23,739   311,298

Ms. Bailey

  86,685   195,236   15,065   296,986

Mr. Burke

    86,685     195,236     48,657   330,578

Ms. Dorman

  82,351   195,236   360   277,947

Mr. Karam

    44,117     195,236     44   239,397

Mr. Szydlowski

  73,682   195,236   19,071   287,989

Mr. Vagt

    78,016     195,236     265,689   538,941

 

 

 

 

 

 

 

 

 

 

 

 

(1)
In connection with the Separation, Mses. Bailey and Dorman and Messrs. Porges, Karam, Burke, Szydlowski, and Vagt resigned from our Board and joined the Board of Directors of Equitrans Midstream Corporation.

(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 2018. On January 1, 2018, the Company granted 3,430 deferred stock units to each non-employee director serving at that time. On November 13, 2018, the Company granted 1,420 deferred stock units to Mses. Cassotis and Powers and Messrs. Lambert and MacCleary. The grant date fair value is computed as the sum of 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, $56.92 for the January 1 grants and $18.56 for the November 13 grants. The aggregate number of awarded deferred stock units, including accrued dividends thereon, outstanding and held at December 31, 2018 was: Ms. Bailey – 37,462; Dr. Behrman – 28,063; Mr. Burke – 19,044; Mr. Cary – 28,063; Ms. Cassotis – 1,422; Ms. Dorman – 19,044; Mr. Karam – 3,823; Mr. Lambert – 1,422; Mr. MacCleary – 1,422; Ms. Powers – 1,422;

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    Mr. Rice – 3,823; Mr. Rohr – 60,982; Mr. Szydlowski – 3,823; Mr. Thorington – 22,378; Dr. Todd – 39,348; Ms. Toretti – 10,145; and Mr. Vagt – 3,823.

(4)
This column reflects (i) dividends accrued on deferred stock units to be settled in cash, (ii) annual premiums of $43.88 per director ($21.94 for Mr. Vagt, $14.63 for Messrs. Burke and Thorington and $0 for Messrs. Lambert and MacCleary and for Mses. Cassotis and Powers) paid for life insurance and travel accident insurance policies, and (iii) the following matching gifts made to qualifying organizations under the EQT Foundation's Matching Gifts Program: $12,500 for Ms. Bailey; $19,000 for Dr. Behrman; $50,000 for each of Messrs. Lambert, Thorington and Vagt and for Dr. Todd; $19,027 for Mr. Szydlowski; and $23,695 for Ms. Toretti. The non-employee directors may use a de minimis number of tickets purchased by the Company to attend sporting or other events when such tickets are not otherwise being used for business purposes. The use of such tickets does not result in any incremental costs to the Company.

In addition to compensation earned for service on EQT's Board, this column reflects compensation (i) Mr. Burke received for his service on the EQM and EQGP boards, consisting of $24,158 for his service on the EQM board, consisting of cash retainers and EQM's share of the life insurance and travel accident insurance policies and an equity grant of EQM phantom units with a grant date fair value of $23,016, and $24,168 for his service on the EQGP board, consisting of cash retainers and EQGP's share of the life insurance and travel accident insurance policies and an equity grant of EQGP phantom units with a grant date fair value of $23,026; (ii) Mr. Thorington received for his service on the EQM and EQGP boards, consisting of $114,154 for his service on the EQM board, consisting of cash retainers and EQM's share of the life insurance and travel accident insurance policies and an equity grant of EQM phantom units with a grant date fair value of $72,528, and $148,769 for his service on the EQGP board, consisting of cash retainers and EQGP's share of the life insurance and travel accident insurance policies and an equity grant of EQGP phantom units with a grant date fair value of $85,004; and (iii) Mr. Vagt received for his service on the RMP board, consisting of $215,667 in cash retainers and RMP's share of the life insurance and travel accident insurance policies and an equity grant of RMP phantom units with a grant date fair value of $165,020.

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EQUITY OWNERSHIP

Stock Ownership of Significant Shareholders

The following shareholders reported to the SEC that they owned more than 5% of the Company's outstanding common stock:

NAME AND ADDRESS




SHARES
BENEFICIALLY
OWNED






PERCENT OF
COMMON STOCK
OUTSTANDING



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

    23,893,102 (1)   9.4 %

T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202



 
25,549,216 (2) 10.0 %

The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355

    23,686,983 (3)   9.3 %

(1)
Information based on Amendment No. 10 to Schedule 13G filed by BlackRock, Inc. with the SEC on February 4, 2019, reporting that BlackRock, Inc. has sole voting power over 22,582,126 shares and sole dispositive power over 23,893,102 shares, and shared voting and dispositive power with respect to zero shares.

(2)
Information based on Amendment No. 1 to Schedule 13G filed by T. Rowe Price Associates, Inc. with the SEC on February 11, 2019, reporting that T. Rowe Price Associates, Inc. has sole voting power over 8,521,336 shares and sole dispositive power over 25,514,095 shares, and shared voting and dispositive power with respect to zero shares; and T. Rowe Price Mid-Cap Value Fund, Inc. has sole voting power over 15,093,439 shares, sole dispositive power with respect to zero shares, and shared voting and dispositive power with respect to zero shares.

(3)
Information based on Amendment No. 8 to Schedule 13G filed by The Vanguard Group with the SEC on February 11, 2019, reporting that The Vanguard Group has sole voting power over 125,886 shares, sole dispositive power over 23,543,209 shares, shared voting power over 44,133 shares, and shared dispositive power over 143,774 shares.

Equity Ownership of Directors and Executive Officers

The table below sets forth the number of shares of EQT common stock beneficially owned by the Company's directors and named executive officers (as determined under SEC rules) and all directors and executive officers as a group as of April 1, 2019 (which group includes all "named executive officers referenced" in the CD&A), including EQT shares they had the right to acquire within 60 days after April 1, 2019.

The amounts and percentages of EQT shares beneficially owned are reported below on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. 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 such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. Except as indicated by footnote, the persons named below have sole voting and

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investment power with respect to all EQT shares shown as beneficially owned by them, subject to community property laws where applicable, and none of the EQT shares are subject to a pledge.

NAME





EXERCISABLE
EQT STOCK
OPTIONS(1)







NUMBER OF EQT
SHARES
BENEFICIALLY
OWNED(2)




EQT DEFERRED
STOCK UNITS
PAYABLE IN CASH(3)



PERCENT OF
CLASS(4)

P.G. Behrman
Director


 
  47,479   11,681         *

A.B. Cary, Jr.
Director

        59,937   11,681         *

C.A. Cassotis
Director


 
  11,240   –         *

W.M. Lambert
Director

        11,240   –         *

G.F. MacCleary
Director


 
  12,997   –         *

A.M. Powers
Director

        11,240   –         *

D.J. Rice IV
Director


 
  234,278   –         *

J.E. Rohr
Chairman

        47,162   22,435         *

S.A. Thorington
Director


 
  36,239   5,987         *

L.T. Todd, Jr.
Director

        27,939   22,983         *

C.J. Toretti
Director


 
  19,975   –         *

R.J. McNally
President and Chief Executive Officer

    39,489     198,246   –         *

J.S. Smith
Senior Vice President and Chief Financial Officer


 
  47,131   –         *

E.R. Centofanti(5)
Executive Vice President, Production

        87,602   –         *

D.M. Jenkins
Executive Vice President, Commercial, Business Development, Information Technology and Safety


 
  56,696   –         *

J.M. Lushko
General Counsel and Senior Vice President, Government Affairs

        37,578   –         *

D.L. Porges(6)
Former Interim President & Chief Executive Officer


 
374,005   557,240   –         *

S.T. Schlotterbeck(7)
Former President and Chief Executive Officer

    278,609     170,647   –         *

D.E. Schlosser, Jr.
Former Senior Vice President and President, Exploration and Production


 
115,019   70,239   –         *

J.J. Ashcroft
Former Senior Vice President and President, Midstream

    81,407     22,327   –         *

Directors and executive officers as a group (22 individuals)(8)

  888,529   1,840,573   74,767         *

 

 

 

 

 

 

 

 

 

 

 

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

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(1)
This column reflects the number of shares of Company common stock that the executive officers and directors had a right to acquire within 60 days after April 1, 2019 through the exercise of stock options.

(2)
This column reflects Company shares held of record and shares owned through a broker, bank or other nominee, including, executive officers' shares owned through the Company's 401(k) plan. For non-employee directors, this column includes deferred stock units (as described in the "Equity-Based Compensation" discussion included under the caption "Directors' Compensation" above), including accrued dividends, that will be settled in common stock, over which the directors have no voting or investment power prior to settlement (Dr. Behrman – 26,239 units; Mr. Cary – 26,239 units; Ms. Cassotis – 11,240 units; Mr. Lambert – 11,240 units; Mr. MacCleary – 11,240 units; Ms. Powers – 11,240 units; Mr. Rice – 13,644 units; Mr. Rohr – 29,526 units; Mr. Thorington – 26,239 units; Dr. Todd – 26,239 units; and Ms. Toretti – 19,975 units). For Dr. Behrman and Messrs. Cary, MacCleary, Rice and Rohr, this column also includes deferred stock units, including accrued dividends, that will be settled in common stock in connection with the deferral of director fees, over which the directors have sole investment but no voting power prior to settlement (Dr. Behrman – 1,240 units; Mr. Cary – 6,121 units; Mr. MacCleary – 1,757 units; Mr. Rice – 1,025; and Mr. Rohr – 2,930 units).

(3)
This column reflects the number of deferred stock units granted prior to 2013 held by non-employee directors through the directors' deferred compensation plans that will be settled in cash, including:

deferred stock units (as described in the "Equity-Based Compensation" discussion included under the caption "Directors' Compensation" above), including accrued dividends (Dr. Behrman – 11,681 units; Mr. Cary – 11,681 units; Mr. Rohr – 22,435 units; Mr. Thorington – 5,987 units; and Dr. Todd – 22,983 units); and

deferred stock units, including accrued dividends, resulting from the curtailment in 1999 of the directors' retirement plan (Mr. Rohr – 10,252 units).

(4)
This column reflects for each of the named executive officers and directors, as well as all executive officers and directors as a group, (i) the sum of the shares beneficially owned, the stock options exercisable within 60 days of April 1, 2019, and the deferred stock units that will be settled in common stock, as a percentage of (ii) the sum of the Company's outstanding shares at April 1, 2019, all options exercisable by the executive officer and director group within 60 days of April 1, 2019, and all deferred stock units that will be settled in common stock upon termination of the directors' service. These calculations exclude all deferred stock units included in the column captioned "EQT Deferred Stock Units Payable in Cash."

(5)
Shares beneficially owned include 10,576 shares held by Ms. Centofanti's spouse.

(6)
Shares beneficially owned include 50,000 shares that are held in a trust of which Mr. Porges is a co-trustee and in which he shares voting and investment power.

(7)
Shares beneficially owned include 28,012 shares owned by Mr. Schlotterbeck's wife. Shares beneficially owned are based upon the most recently available ownership information provided to the Company from Mr. Schlotterbeck.

(8)
In addition to the Company's directors and executive officers as of April 1, 2019, also includes the four named executive officers who are former employees in accordance with applicable SEC rules.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that the Company's directors, executive officers and all persons who beneficially own more than 10% of the Company's common stock file initial reports of ownership and reports of changes in ownership of the Company's common stock with the SEC. As a practical matter, the Company assists its directors and executive officers by monitoring transactions and completing and filing Section 16 reports on their behalf. Based solely upon the Company's review of copies of filings or written representations from the reporting persons, the Company believes that all reports that were required to be filed under Section 16(a) of the Exchange Act were filed on a timely basis during 2018, with the exception of the following. Due to an administrative error by the Company, the Forms 3 filed for Messrs. Lushko, Mitchell and Smith inadvertently omitted one time-based restricted stock unit award granted to each of them in early 2018.

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EXECUTIVE COMPENSATION

The Compensation Discussion and Analysis (the "CD&A") and "Narrative Disclosure to Summary Compensation Table and 2018 Grants of Plan-Based Awards Table" below contain references to the Company's adjusted EBITDA and adjusted EBITDAX, financial measures that have not been calculated in accordance with generally accepted accounting principles ("GAAP"), which are also referred to as non-GAAP supplemental financial measures. Attached as Appendix A to this CD&A is a reconciliation of each of the Company's adjusted 2018 EBITDA and adjusted 2018 EBITDAX to net income, the most directly comparable GAAP financial measure, as well as other important disclosures regarding non-GAAP financial measures.

As shareholders, you are invited to express your view of the compensation paid to the Company's named executive officers for 2018, as discussed and analyzed below.

This Executive Compensation portion of this proxy statement is organized into the following sections:

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Compensation Discussion and Analysis

Message from the Management Development and Compensation Committee

2018 was a pivotal year for our Company as we transformed into a free cash flow-focused, pure play Appalachian upstream company.

The Company that we are today is the result of significant work and many accomplishments over the past year. These efforts included:

    the successful integration of the business and operations of the former Rice Energy;

    completion of the sum-of-the-parts discount analysis, which evaluated the shareholder value creation opportunity of splitting the production and midstream operations into two separate companies; and

    the successful spin-off to our shareholders of the Company's midstream business into a stand-alone, publicly traded company.

Successfully executing these complex, transformative transactions marked a major achievement in 2018 and served to position the Company as a focused, premier pure-play upstream company with a vastly simplified financial and operational structure.

The Company transitioned to a new Chief Executive Officer, Robert McNally, who has announced his vision for the Company – to unlock the tremendous value in EQT's world-class asset base by operating more efficiently and cost effectively to maximize free cash flow generation while continuing to adhere to the highest standards in safety and environmental sustainability. The Committee has confidence in Mr. McNally's leadership and strategic focus on achieving this vision.

At the same time, we as a Committee were mindful of the Company's disappointing third quarter 2018 capital expenditures and operational performance relative to business plan. Consistent with our performance-based compensation philosophy, our 2018 compensation decisions, which are explained more fully in the rest of this Compensation Discussion and Analysis, were informed in part by these events.

We, the Management Development and Compensation Committee, are committed to ensuring that our compensation programs align incentives for executive performance with the Company's strategic priorities to drive increased shareholder value. To align our 2019 compensation programs to this strategy, total shareholder return, operating efficiency, development efficiency and return on capital employed are significant performance measures under our 2019 long-term incentive program. The short-term incentive plan focuses our employees on financial measures as well as safety and environmental metrics. The Committee also leveraged the expertise of the recently formed Operating and Capital Efficiency Committee in setting appropriately robust performance metrics against which performance will be measured.

We remain committed to listening to shareholder feedback as we continue to evaluate and refine the Company's compensation programs.

GRAPHIC   GRAPHIC   GRAPHIC   GRAPHIC

A. Bray Cary, Jr.

 

William M. Lambert

 

James E. Rohr

 

Dr. Lee T. Todd, Jr.

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Compensation Program Summary

Introduction

GRAPHIC

EQT's core values include a commitment to operational excellence, integrity, and accountability, and its executive compensation program is intended to promote achievement consistent with these values. The Company believes that its executive compensation program:

    is designed to attract and retain the highest quality named executive officers;

    aligns the interests of the Company's named executive officers with the interests of its shareholders by directly linking executive pay to Company performance;

    directly supports the Company's strategic plan by focusing employee performance on specific value drivers; and

    is market-based and premised upon informed industry benchmarking.

The Company's compensation program is designed to reward the named executive officers when the Company achieves strong financial and operational results. Executive compensation is structured to require a commitment to performance, as evidenced by the large percentage of executive compensation that is "at-risk."

The charts below reflect the fixed versus at-risk performance components of 2018 compensation for Mr. McNally, who was serving as the Chief Executive Officer at the end of 2018, on the one hand, and the other named executive officers who were serving as such at the end of 2018, on the other. The Company believes that the 2018 compensation of its named executive officers is consistent with its commitment to link pay with performance.

GRAPHIC

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Named Executive Officers for 2018

This CD&A describes the Company's compensation philosophy and the components of the Company's compensation program for the following named executive officers in 2018.

Name

Title
  Robert J. McNally   President and Chief Executive Officer(1)
  Jimmi Sue Smith   Senior Vice President and Chief Financial Officer(2)
  Erin R. Centofanti   Executive Vice President, Production(3)
  Donald M. Jenkins   Executive Vice President, Commercial Business Development, Information Technology and Safety(4)
  Jonathan M. Lushko   General Counsel and Senior Vice President, Government Affairs(5)
  David L. Porges   Former Interim President and Chief Executive Officer(6)
  Steven T. Schlotterbeck   Former President and Chief Executive Officer(7)
  David E. Schlosser, Jr.   Former Senior Vice President and President, Exploration & Production(8)
  Jeremiah J. Ashcroft III   Former Senior Vice President and President, Midstream(9)

(1)
Mr. McNally became the Company's President and Chief Executive Officer in November 2018, effective as of the Spin-off date. Mr. McNally previously served as the Company's Chief Financial Officer.

(2)
Ms. Smith assumed her role effective as of the Spin-off date. Ms. Smith previously served as the Company's Chief Accounting Officer.

(3)
Ms. Centofanti assumed her role in October 2018. Ms. Centofanti previously served as the Senior Vice President of Asset Development for EQT Production. Effective upon Gary E. Gould's commencement of employment as the Company's Executive Vice President and Chief Operating Officer on April 22, 2019, Ms. Centofanti ceased to serve in the role of Executive Vice President, Production and, on such date, Ms. Centofanti announced her intent to resign from the Company, effective May 3, 2019.

(4)
Mr. Jenkins assumed his role effective as of the Spin-off date. Mr. Jenkins previously served as the Company's Chief Commercial Officer.

(5)
Mr. Lushko assumed his role in October 2018. Mr. Lushko previously served as Deputy General Counsel, Governance & Enterprise Risk.

(6)
Mr. Porges served as interim President and Chief Executive Officer of the Company from March 2018 until the Spin-off date.

(7)
Mr. Schlotterbeck served as the Company's President and Chief Executive Officer and as a director of the Company until March 2018.

(8)
Mr. Schlosser served in his position until October 2018.

(9)
Mr. Ashcroft served in his position until October 2018.

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Significant Events and Performance Highlights for 2018

2018 was a transformative year for the Company. After acquiring Rice Energy in November 2017, the Company successfully integrated the former Rice Energy business and operations. At the same time, the Company and the Board conducted a comprehensive review process to assess the sum-of-the-parts discount, the undertaking of which was influenced to a significant degree by the Company's robust dialogue with our shareholders. This process culminated in the Board's decision to separate the Company's upstream and midstream businesses, which was announced in February 2018 and completed by November 2018.

In March 2018, David Porges was appointed as interim-President and Chief Executive Officer and served in that role until November 2018.

In April 2018, the Company announced a series of midstream streamlining transactions that included the acquisition by EQM of the Company's retained midstream assets and Gulfport Energy's 25% ownership in the Strike Force Gathering System for $1.69 billion, the merger of EQM and RMP and the purchase by EQGP of RMP's Incentive Distribution Rights. These midstream streamlining transactions were successfully completed in July 2018.

In August 2018, following a comprehensive and rigorous CEO search process, the Board selected Robert J. McNally to serve as the Company's President and Chief Executive Officer, effective upon the completion of the separation of the Company's upstream and midstream businesses in November 2018.

In November 2018, the Company successfully completed the separation through the Spin-off to the Company's shareholders of the midstream business. Upon the closing of the Spin-off, Mr. McNally assumed the role of President and Chief Executive Officer of the Company. Additionally, in November 2018, we began a refreshment of our Board by adding four new, independent directors to the Board.

Through the execution of the Spin-off, the Company transformed into a premier pure-play upstream company that is the largest natural gas producer in the United States and boasts a world-class asset base in the core of the Appalachian Basin. At the same time, the Company unlocked significant value to its shareholders through the Spin-off and distribution of 80.1% of the issued and outstanding equity of Equitrans Midstream Corporation ("ETRN"), a premier, stand-alone Appalachian midstream company that is the third-largest natural gas gatherer in the United States. ETRN now trades on the New York Stock Exchange under the ticker symbol "ETRN."

This transformative transaction, and the series of complex transactions required to facilitate its execution, positioned the Company as a free cash flow-focused, pure-play Appalachian upstream company, with a simplified corporate structure and strong balance sheet. These decisions were informed in large part by our robust and continuous dialogue with our shareholders.

In December 2018, the Board established a new standing Board committee, the Operating and Capital Efficiency Committee. The Operating and Capital Efficiency Committee consists of four independent directors with significant industry experience and is tasked with an ongoing review of the Company's operations and capital deployment. At this same time, the Company commenced a search process to identify and hire a Chief Operating Officer. This comprehensive search process resulted in the hiring of Gary E. Gould, former Senior Vice President, Production and Resource Development at Continental Resources, Inc., as the Company's Executive Vice President and Chief Operating Officer, effective April 2019.

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The following timeline illustrates these significant events:

GRAPHIC

At the same time, the Company achieved a number of other key financial and operational results in 2018, which are described in detail in our Form 10-K for the year ended December 31, 2018, including the following:

2018 Operational Highlights

    Achieved a record year for the Company, with annual sales volumes of 1,488 Bcfe(1) and average daily sales volumes of 4,076 MMcfe(2) per day.

    Completed sales of 2.5 million non-core net acres in the Huron Play located in Southern Appalachia for net proceeds of approximately $523.6 million and certain non-core Permian Basin assets located in Texas for net proceeds of approximately $56.9 million ("the Huron and Permian Divestitures"). The successful completion of these divestitures positions the Company to focus on our core operations.

    Proved reserves increased 2% in 2018, or 11% when adjusted for the impact of the Huron and Permian Divestitures.

Looking forward, and consistent with its effort to drive an industry-leading cost structure, the Company has forecast a 2019 production sales volume of 1,480 to 1,520 Bcfe and anticipates that the 2019 drilling program will support a 5% increase in sales volume in 2020 over the Company's 2019 expected volumes.


(1)
Bcfe = billion cubic feet of natural gas equivalents, with one barrel of natural gas liquids (NGLs) and crude oil being equivalent to 6,000 cubic feet of natural gas.

(2)
MMcfe = million cubic feet of natural gas equivalents, with one barrel of NGLs and crude oil being equivalent to 6,000 cubic feet of natural gas.

Environmental, Safety and Community

In 2018, the Company also continued our focus on fulfilling our corporate social responsibility commitments to operate as a safe, responsible and accountable corporate citizen.

The Company launched numerous initiatives during 2018 focusing on safety, including our "Zero is Possible – Today" safety program, which focuses all employees and our contractors on eliminating

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workplace accidents and injuries each day. By enhancing our safety-focused culture, the Company achieved an approximately 39% drop in our 2018 Occupational Safety and Health Administration ("OSHA") recordable incident rate (a measure of the relative number of employees involved in a recordable injury or illness) as compared to 2017.

Consistent with our commitment to environmental stewardship, the Company is a founding partner of the Center for Responsible Shale Development and, in 2018, joined the ONE Future Coalition, a group of natural gas companies working together to use a science-based approach to reduce methane emissions across the industry's supply chain. The Company also published a robust 2018 Corporate Social Responsibility Report in accordance with Global Reporting Initiative 4.0 standards, which you can view on our website by visiting csr.eqt.com.

The Company also built upon our continuing efforts to support local communities through local giving, sponsorship and philanthropic efforts.

Pay for Performance Results

The Management Development and Compensation Committee (for purposes of this Executive Compensation disclosure, the Committee) aims to align the named executive officers' compensation with the performance of the Company. In 2018, the Committee's independent compensation consultant, Pay Governance, assessed the alignment of the aggregate realizable compensation awarded to the Company's Chief Executive Officer for the five-year period ending December 31, 2017 (the last year for which this information was publicly available at the time) with the performance of the Company on a relative basis, during the same five-year period, to the aggregate realizable compensation of chief executive officers of the 2018 peer group discussed below, which was calculated on the basis of peer group company summary compensation table disclosures and, in the case of estimated award payouts for unvested awards, peer group company outstanding equity awards table disclosures. The analysis behind the selection of the 2018 peer group is described below under "Benchmarking."

The chart below shows the results of this assessment and compares:

    the Company's performance relative to the performance of the 2018 peer group over the five-year period ending December 31, 2017 based on total shareholder return ("TSR"), which the Company believes is an appropriate performance measure in evaluating shareholder value; and

    the total realizable compensation of the Company's Chief Executive Officer relative to the total realizable compensation of the chief executive officers of the 2018 peer group companies over the same period. Realizable compensation is defined as the sum of: (i) base salary earned during the five-year period, (ii) actual non-equity incentive compensation earned during the five-year period, (iii) aggregate current value of restricted share grants received during the five-year period, (iv) aggregate in-the-money value of stock option grants received during the five-year period, and (v) for performance-based compensation the actual payouts for awards beginning and ending during the five-year period and an estimated payout (based on values disclosed in outstanding equity awards tables) for unvested awards received but not paid during the five-year period.

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Pay-for-Performance Alignment

GRAPHIC

Source: Pay Governance LLC

As reflected in the chart above, the realizable compensation of the Company's Chief Executive Officer positioned the Company at the 53rd percentile of the 2018 peer group, which is aligned with the Company's composite performance over the same period at the 53rd percentile, showing the close link between the Chief Executive Officer's compensation and Company performance.

Management Development and Compensation Committee Highlights

The Committee evaluates and, when appropriate or desirable, takes action with respect to various aspects of the Company's compensation programs. The following highlights the Committee's key actions in 2018:

    Managed senior executive leadership changes throughout the year.  With the announcement of the resignation of Mr. Schlotterbeck, the interim appointment of Mr. Porges as President and Chief Executive Officer, the appointment of Mr. McNally as President and Chief Executive Officer, the promotions of Ms. Smith, Ms. Centofanti and Mr. Lushko, and the departures of Mr. Schlosser and Mr. Ashcroft, the Committee, in consultation with Pay Governance, designed appropriate, market-based compensation packages that it deemed appropriately retentive for the interim and promoted executives.

    Supported a comprehensive and successful CEO search process.  Following Mr. Schlotterbeck's voluntary departure, the Board formed a search committee that led a comprehensive search process to identify and evaluate potential executive candidates to become the Company's new Chief Executive Officer. The process was supported by a third-party search firm that identified several external candidates who were thoroughly vetted by the Board. The Committee provided support throughout this process and, upon the Board's selection of Mr. McNally to serve as the Company's President and Chief Executive Officer, developed an appropriate compensation package, consistent with its compensation philosophy described below, to support Mr. McNally's transition into his new role.

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    Supported the successful completion of the Spin-off.  In connection with the Spin-off, the Committee supported development of a comprehensive approach to employee compensation and other employee-related matters. Among other matters, the Committee applied what is commonly known as a "basket method" adjustment approach to existing long-term equity incentive awards in connection with the Spin-off, under which such awards were converted into equity incentive awards in respect of both the Company and ETRN, rather than replacing all such awards with awards denominated solely in Company or ETRN stock. The Committee believed this approach would maximize overall value to the Company's shareholders – who also became shareholders of ETRN through the Spin-off – by aligning the interests of all employees with the success of both companies (see "Treatment of Equity-Based Compensation in the Spin-off" below).

    Other compensation-related committee actions taken in 2018 –

    §
    2018 incentive bonuses reduced when compared to 2017 bonuses, or otherwise forfeited.  In establishing the 2018 individual incentive bonuses for the Company's named executive officers, in addition to considering overall 2018 Company performance and the individual performance of each named executive officer, the Committee also considered the Company's third quarter 2018 capital expenditures and operational performance relative to its business plan. Based on performance results, the Committee determined that no portion of any 2018 cash incentive bonuses would be awarded to the named executive officers who departed during 2018. In addition, although the Executive STIP pool funded at $52.9 million, the Committee distributed less than $1.3 million, in the aggregate, to Messrs. McNally and Jenkins and Ms. Smith, the three named executive officers who participated in the Executive STIP for 2018. The total 2018 incentive bonuses for the continuing executive officers totaled only approximately 41% of the incentive bonuses paid to the comparable group of the Company's executives for 2017 (see Summary Compensation Table below for details).

    §
    No upward discretionary adjustments in calculating 2018 annual incentive performance measures. In measuring performance for purposes of the Company's annual incentive plans, the Committee has the discretion to adjust for items not contemplated in the original business plan in order to avoid undue negative effects on possible annual incentive payment amounts. In light of the Company's third quarter 2018 capital expenditures and operational performance relative to business plan, the Committee declined to exercise its discretion to make any upward discretionary adjustments for the 2018 annual incentive plan.

    §
    Exercised downward discretion in determining long-term performance goal achievements.  The Committee exercised its downward discretion to exclude production from Rice Energy wells producing as of the closing of the Company's acquisition of Rice Energy in late 2017 (the "Rice Transaction") from the three long-term incentive performance programs that did not automatically exclude such production (i.e., the previously granted incentive performance share units).

    §
    2018 long-term award values were set below the market median.  The Committee set the value of 2018 long-term incentive awards, which represent the largest element of target total direct compensation granted to the named executive officers who were senior executives at the time of grant, below the market median.

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      §
      2018 long-term awards depend on achieving synergy targets.  For those named executive officers who served as executive officers at the beginning of 2018, the performance metrics for a material portion of their 2018 long-term incentive awards are tied to achieving the one- and three-year synergy commitments made by the Company in connection with the Rice Transaction, with an automatic reduction if the Company does not achieve its one-year synergy commitments in connection with the Rice Transaction.

    The Committee designed the 2019 long-term incentive programs for the Company's continuing named executive officers to reflect the Company's strategic focus on operating and capital efficiency.  The Committee believes that the Company's future successes will be driven by a focus on optimizing operations and generating returns. For this reason, the Committee determined that a significant portion of the 2019 long-term incentive programs will relate to performance metrics measuring operating efficiency, development efficiency and return on capital employed. The Committee sought input from the Company's newly formed Operating and Capital Efficiency Committee to ensure that these performance goals were aligned with the Company's objectives and established at a level that is appropriately rigorous. In setting the metrics, the Committee considered both the Company's historical performance on the specified measures and the Company's 2019 business plan objectives. Importantly, production sales volume growth is not a performance metric included in the 2019 long-term incentive programs.

Shareholder Outreach and Consideration of 2018 Say-on-Pay Vote and Feedback from Shareholder Engagement

In establishing and recommending the 2019 compensation program for the Company's continuing named executive officers (Messrs. McNally, Jenkins and Lushko and Mses. Smith and Centofanti), the Committee carefully considered the shareholder feedback received in connection with the Company's annual shareholder outreach program. It also noted that approximately 96% of the votes cast at the 2018 annual meeting approved the compensation of the Company's named executive officers for 2017.

Additionally, in 2018, the Company continued its practice of engaging with its shareholders to solicit feedback and input regarding its executive compensation program, reaching out to, and offering to meet with, each of the Company's 15 largest institutional shareholders and 10 largest index fund shareholders. The Company engaged in a dialogue with those shareholders that elected to meet with the Company in 2018, which included discussion of the Company's proposed 2019 executive compensation plan design and proposed performance measures for its 2019 executive compensation program. Additionally, the Company agreed to meet with, and received feedback from, various smaller shareholders who requested meetings in 2018.

Based on the results of the 2018 say-on-pay vote and feedback received through the Company's shareholder outreach efforts, the Committee concluded that the compensation paid to the named executive officers and the Company's overall pay practices have strong shareholder support. Nonetheless, the Committee undertook a thorough analysis of its compensation programs, especially in light of the Spin-off, and made certain modifications for 2019 as described above and below.

The Committee recognizes that both executive pay practices and the Company's strategy continue to evolve. Consequently, the Committee intends to continue to (i) pay close attention to the advice and counsel of its independent compensation advisors and (ii) engage in meaningful shareholder outreach. The Committee also invites our shareholders to communicate any concerns or opinions on executive pay directly to it or the Board. See the caption "Contacting the Board" under "Corporate Governance and Board Matters" above for information about communicating with the Committee and the Board.

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The advisory vote on executive compensation will occur every year until the next vote on the frequency of shareholder votes on executive compensation, which will occur at the Company's 2023 annual meeting.

Compensation Philosophy

Our executive compensation program supports EQT's core values of operational excellence, integrity, and accountability, as evidenced by the key aspects of the Committee's compensation philosophy:

 
   
   
   
   
    ASPECT     ANALYSIS  
    Designed to Achieve the Company's Objectives       The Company's compensation programs are designed:

to attract, motivate, and retain highly talented executives who can ensure that the Company is able to safely, efficiently, and profitably produce and gather natural gas; and

to seek executives willing to trade guaranteed compensation for the opportunity presented by performance-based, at-risk compensation that depends upon achieving challenging performance objectives with an appropriate level of risk-taking.

Stated differently, our compensation programs are structured to require a commitment to performance goal achievement because a large percentage of executive compensation is not guaranteed.

   
    Compensation is Performance-Driven and Aligned with the Company's Strategic Plan       Compensation packages are weighted in favor of performance-based, at-risk compensation through annual and long-term performance-based incentive pay programs (see illustration on page 52).

The Committee aligns its executive compensation decisions with the Company's strategic plan. As the Company's strategic plan evolves, the Committee reevaluates the financial and operational metrics used to measure performance under its compensation plans and, where appropriate, makes

   
            corresponding changes to those metrics to drive group and individual performance most likely to achieve the business plan and generate strong returns to shareholders. Consistent with the Company's strategic priorities, the Company intends to focus on cost and capital efficiency. To that end, the Committee selected operating efficiency, development efficiency, and return on capital employed as performance metrics for its 2019 long-term incentive compensation program, in addition to relative TSR, which remains an important metric aligning management incentives with increased shareholder value.

   
    Compensation Should Be Competitive       The Committee benchmarks each element of total direct compensation and the mix of compensation (cash versus equity) of the named executive officers against a peer group established by the Committee, in consultation with Pay Governance. The Company has structured compensation packages for the named executive officers as a mix of base salary and annual and long-term incentives to be competitive in the marketplace.

Generally, in establishing total direct compensation for 2018, the Committee targeted 90% of the market median (based on the 2018 peer group) for named executive officers. See "Determining Target Total Direct Compensation" below.

   

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    ASPECT     ANALYSIS  
    Compensation-Related Risk Should Be Thoughtfully Managed and Subject to Clawback       Our compensation programs are designed to avoid excessive risk taking. See "Compensation Policies and Practices and Risk Management" below for a discussion regarding the evaluation of risks associated with the Company's compensation programs.

The Company has a compensation recoupment (or "clawback") policy applicable to current and former executive officers of the Company where the Company may, in certain circumstances, recoup certain annual and long-term incentive compensation paid to the covered individuals in the event of an accounting restatement due to material non-compliance with financial reporting requirements under U.S. securities laws.

   
    Incentive Compensation Balances Annual and Long-Term Performance       Our compensation programs are designed to balance rewarding the achievement of strong annual results and ensuring the Company's long-term growth and success. To this end, a mix of both annual and longer-term incentives is provided and allocated in a manner generally consistent with the Company's peer group. Participation in both the annual and long-term incentive programs, which is largely based on comparative benchmarking, will increase at higher levels of responsibility, as the named executive officers have the greatest influence on the Company's strategic direction and results over time.

   
    Peer Groups Help Establish Compensation and Define Competitive Levels of Performance       The Committee uses an industry-specific peer group of companies:

to help establish base salary and target annual and long-term incentives for the named executive officers;

to ensure that the total direct compensation of the named executive officers is competitive; and

in measuring relative company performance for some of our long-term incentive programs.

   
    Impact of Tax Laws Should Be Considered When Designing Compensation       The Committee continues to consider the impact of applicable tax laws with respect to compensation paid under the Company's plans, arrangements and agreements. See "Tax Matters" below.    
    Executives are Required to Own Equity, Which May Not Be Pledged or Hedged       Share Ownership Guidelines. Consistent with the goal of driving long-term value creation for shareholders, the Company's equity ownership guidelines require significant equity ownership by our named executive officers. See "Equity Ownership Guidelines," below.

No Pledging; No Hedging. An executive may not pledge EQT equity or the equity of any subsidiary for which the executive serves as a director or an executive officer. Similarly, an executive may not hedge or otherwise invest in derivatives involving EQT stock.

   

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Compensation Decisions for 2018

Making Executive Compensation Decisions

Key Elements of 2018 Compensation Program

Base salaries and annual and long-term incentive awards comprise total target direct compensation for our named executive officers. When appropriate, the Committee also provides certain limited perquisites and makes other awards.

 
   
   
   
   
   
   
    Element     Description     Form of Compensation  
    Base Salary       Provides base compensation for day-to-day performance of job responsibilities       Cash    
    Annual Incentives       Rewards performance during the year based on the achievement of annual performance goals       Cash*    
    Long-Term Incentives       Encourages improvement in the long-term performance of our Company and aligns the financial interests of our executives with the interests of our shareholders 50% of Long-Term Incentives to all NEOs are tied to achievement of pre-set performance objectives      

Stock options

Restricted share and unit awards

Performance share unit awards

   
    Strategic Incentive       One-time award provided as an incentive for our executives to focus on the execution of the complex Spin-off transaction during 2018 and to reward efforts for completing the Spin-off      

Cash

Performance or restricted share and unit awards

   
    Other Compensation       Provides a broad-based executive compensation program for employee retention, retirement and health       Retirement and savings programs, health and welfare programs, and employee benefit plans, programs and arrangements generally available to all employees; limited perquisites    
*
May be paid in equity in limited circumstances.

Determining Target Total Direct Compensation

When establishing target total direct compensation for each named executive officer, the Committee considers:

    The Committee's overall compensation philosophy;

    The market median of target total direct compensation as reviewed with the Committee's 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; and

    The Chief Executive Officer's compensation recommendations for each named executive officer (other than himself or herself).

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The Committee also periodically seeks input from, or the approval of, the other independent directors of the Board as it deems appropriate. For example, in deciding upon appropriate performance metrics for the operating efficiency and development efficiency performance measures under the 2019 Incentive PSU Program (which program is described below), the proposed performance metrics were formally reviewed with the Operating and Capital Efficiency Committee of the Board prior to the Committee approving the performance metrics.

In considering the amount and type of each component of compensation, the Committee evaluates the effect of each element on all other elements, as well as the allocation of target total direct compensation between (i) cash and equity and (ii) long- and short-term compensation. The Committee is committed to providing a significant portion of each named executive officer's compensation in the form of performance-based awards.

Benchmarking

Each year, the Committee reviews executive compensation peer groups with its independent compensation consultant for continued appropriateness. Accordingly, these peer groups have changed over time, consistent with the evolution of both the Company and its industry.

This peer group review typically occurs in the fall prior to the relevant year and includes an analysis of the then-current peer group and other potential peers, including peers identified by the larger proxy advisory services. The Committee considers industry, strategic focus, talent competitiveness, whether an entity is a peer of peers, geographic location, ownership structure, current and historical financial and stock performance, and scope.

    Financial performance metrics considered include net income, market capitalization, and revenue.

    Market performance over one-, three-, and five-year periods is typically considered.

    Based on information available at the time the Committee selects the peer group, the Company's financial metrics generally approximate, on balance, the financial metrics of the median of the peer group.

The Committee also reviews the number of peer group companies, as consolidation and other changes in the industry over a three-year performance period could result in too small of a peer group. Peers are most frequently removed from the peer group when they or the Company complete a large acquisition or disposition, they are acquired, or they or the Company shift industry emphasis or they enter bankruptcy. Peers are most frequently added as they become appropriately sized.

    Impact of Rice Transaction and Spin-off.  In assessing the market median for named executive officer compensation, the Committee noted that changes to the Company's peer group for 2018, as a result of the closing of the Rice Transaction in late 2017, signaled a need for increases to each element of target total direct compensation for each named executive officer in order to keep the compensation market competitive. In setting 2018 target total direct compensation opportunities, however, the Committee also desired to demonstrate its commitment to achieving Rice Transaction synergies. Moreover, the Committee was cognizant that the conclusions reached in the review of the "sum-of-the-parts discount" in anticipation of the Spin-off could result in a significantly different company, with a different peer group, moving forward.

In considering the Company's peer group for 2019, the Committee, based upon recommendations and advice from Pay Governance, also took into consideration the profile of the Company

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following the completion of the Spin-off in November 2018. Specifically, in consultation with Pay Governance, the Committee refined the 2019 peer group to include only companies having greater than 30% of their production volume coming from natural gas in light of the Company's transformation into a pure-playupstream company. Finally, the Committee took into consideration the reduction in the Company's market capitalization that resulted from the Spin-off, ultimately deciding to exclude from the 2019 peer group those companies that fell outside of a relative range of market capitalization size, when compared to the Company on a post-Spin-off basis.

See Appendix B to this CD&A for the 2017, 2018 and 2019 peer groups and a comparison of their financial metrics.

Tally Sheets

Annually, the Committee is provided with a tally sheet for each named executive officer, which is designed to provide the Committee with a full picture of both the executive's compensation history and all compensation payable upon the executive's termination of employment and in connection with a change of control. Each tally sheet generally sets forth the following elements of compensation history:

    a history of five years of base salary, annual incentive targets and awards, and perquisites; and

    a history of five years of long-term incentive awards, including realized gains as well as potential gains on unexercised or unvested awards.

The tally sheets also reflect the value of compensation due to each named executive officer under certain termination scenarios, including:

    termination of the executive by the Company with and without cause, as defined in any applicable agreement or policy;

    termination by the executive for good reason, as defined in the applicable agreement;

    termination by the executive other than for good reason, including retirement;

    termination of the executive in connection with or following a change of control; and

    disability or death.

With regard to each scenario, the tally sheets include:

    the cash amounts payable to the executive, including outplacement and other payments;

    the cost of benefits continuation;

    the value of all equity awards, including the acceleration of unvested equity awards and the value of forfeited awards; and

    any other compensation payable to the executive upon termination.

The tally sheets are provided to Committee members in an electronic resource book for easy reference. This resource book also contains base salary, annual and long-term incentive targets, all incentive plan documentation, and all employment-related agreements for each of the named executive officers.

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Role of the 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. During 2018, the Committee utilized Pay Governance as its independent compensation consultant, and Pay Governance reported directly to the Committee. Representatives of Pay Governance 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

    advice regarding the performance of the Company's annual review of compensation risk.

Representatives of Pay Governance do not make recommendations on, or approve, the amount of compensation for any executive officer. The Committee may request information or advice directly from representatives of Pay Governance and may direct the Company to provide information to representatives of Pay Governance. Representatives of Pay Governance regularly interact with members of the Committee (including at each Committee meeting), as well as with representatives of the Company's human resources department and, periodically, with the Chief Executive Officer and representatives of the Company's legal department.

Setting Target Total Direct Compensation

Based on the several factors described above, and after receiving the input of Pay Governance, in early 2018, the Committee set the 2018 target total direct compensation opportunity for each named executive officer who was an executive officer of the Company at such time, other than Mr. Schlotterbeck, at 90% of the market median with respect to the 2018 peer group target total direct compensation opportunity. This was accomplished by providing each such named executive officer with:

    a 5% base salary increase;

    a market median annual incentive target award; and

    a long-term incentive target award that, when coupled with the executive's 2018 base salary and annual incentive target, aggregated to 90% of the value of the market median total direct compensation.

Mr. Schlotterbeck's 2018 target total direct compensation was set at 82% of the market median with respect to the 2018 peer group target total direct compensation, which the Committee believed was appropriate in light of Mr. Schlotterbeck having only recently assumed the role of chief executive officer at the time 2018 target total direct compensation decisions were determined.

In addition, the 2018 long-term incentive target awards granted to these named executive officers were subject to a 13.5% reduction in the event that the targeted Rice Transaction first-year operating or development synergies were not achieved. The Committee believed that this approach, which favored at-risk compensation that depended upon achieving results and was structured to avoid a "windfall" to executives solely by virtue of growth of the Company due to the

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Rice Transaction, would properly motivate these executives to meet their commitments, while providing appropriate incentives to them for their management of a larger Company, assuming the achievement of the performance metrics.

For 2019, the Committee established the total target direct compensation opportunity for its named executive officers, as a percentage of the market median for each executive's comparable position among the Company's 2019 peer group, at 90% of the market median for Mr. McNally and Ms. Centofanti, 95% of the market median for Mr. Jenkins, and 89% of the market median for Ms. Smith and Mr. Lushko.

2018 Compensation Decisions

Overview of Compensation Components

The following elements comprised the Company's 2018 executive compensation arrangements: base salaries, annual incentives, long-term incentives, one-time strategic incentive awards, health and welfare benefits, retirement programs, perquisites, and non-compete agreements.

Base Salary

The base salary for each named executive officer was established taking into account the factors discussed under "Determining Target Total Direct Compensation" above. Base salaries are ordinarily considered by the Committee and, where appropriate, adjusted towards the beginning of each calendar year. For 2018, the Committee also reviewed and adjusted base salaries for promoted named executive officers to reflect their increased levels of executive responsibilities. The following adjustments were made in 2018 to the base salary of each of our currently-serving named executive officers:

Named
Executive
Officer






2017 Base
Salary




2018 Base
Salary


Market Median for
Peer Group(1)





Percentage of
Market
Median(1)
 

R.J. McNally

  $ 475,000   $ 498,750 (2) $1,020,000     88 %

       
$

900,000

(3)
         

 

 

 

 

 

 

 

 

 

 

 

 

 

J.S. Smith

  $ 242,250   $ 254,363 (2) $579,000   80 %

 


 

$

463,200

(3)

 

 

E.R. Centofanti

 
$

300,000
 
$

315,000

(2)

$583,500

   
80

%

       
$

466,800

(4)
         

 

 

 

 

 

 

 

 

 

 

 

 

 

D.M. Jenkins

  $ 336,600   $ 386,400 (2) $583,500   96 %

 


 

$

558,075

(3)

 

 

J.M. Lushko

 
$

240,000
 
$

252,000

(2)

$575,000

   
80

%

       
$

460,000

(4)
         

(1)
The "market median for peer group" is the median base salary paid by companies within the Company's 2018 peer group to their executive officers holding comparable positions to the position held by the named executive officer at the time of his or her most recent base pay increase. For Mr. Lushko, the market median was determined by reference to broader industry data due to unavailability of comparable peer group data.

(2)
Represents base salary amount effective February 2018 for position held prior to promotion.

(3)
Represents base salary amount effective following promotion in November 2018.

(4)
Represents base salary amount effective following promotion in October 2018.

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Consistent with the discussion above under "Setting Target Total Direct Compensation," each of Messrs. Schlotterbeck, Schlosser and Ashcroft received a 5% base salary increase in February 2018.

Annual Incentives

Overview

Annual cash incentive awards are designed to drive and reward performance and are based on financial objectives and individual functional or business group objectives established by the Committee. For 2018, annual incentives for our named executive officers were determined under (i) the Executive Short-Term Incentive Plan (the "Executive STIP") – under which plan named executive officers typically earn their annual incentives – and (ii) the Company's Short-Term Incentive Plan (the "Regular STIP") – under which plan certain promoted named executive officers earned their annual incentives in 2018 as participants in such plan prior to promotion.

    The Executive STIP is the annual bonus plan under which the named executive officers typically earn their annual incentives. Messrs. McNally and Jenkins and Ms. Smith, who were executive officers in early 2018 when the Committee approved target annual incentive awards for 2018, each participated in the Executive STIP for 2018. Although these executives were promoted during 2018, the Committee did not make a corresponding increase to their target annual incentive opportunities to the 2018 market median annual incentive target opportunities for their promoted positions. The Committee also did not apply their target percentages to their base salaries as increased at the time of promotion.

    Ms. Centofanti and Mr. Lushko, who became executive officers in October 2018, each participated in the Regular STIP for 2018. Although these executives were promoted during 2018, the Committee did not make a corresponding increase to their target annual incentive opportunities to the 2018 market median annual incentive target opportunities for the promoted positions. The Committee also did not apply their target percentages to their base salaries as increased at the time of promotion.

Determination of 2018 Target Annual Incentive Awards

Typically, before or at the start of each year, the Committee approves the target annual incentive award for each named executive officer taking into account the factors discussed under "Determining Target Total Direct Compensation" above.

The target 2018 annual incentive award approved by the Committee for each of our currently serving named executive officers was established based upon the position held by the executive prior to his or her promotion in 2018. For Mr. McNally, his target 2018 annual incentive award was set at an amount equal to the market median (based on the Company's 2018 peer group) for his prior position as the Company's Chief Financial Officer. For each of our other named executive officers (none of whom were executive officers in early 2018), their target 2018 annual incentive award was established at a level equal to the median for their comparable position, based upon general industry compensation data provided by Pay Governance. Consistent with the Company's policy of not adjusting annual incentive targets for promotions occurring after October 1, the target 2018 annual incentive awards for the Company's named executive officers were not adjusted as a result of their promotions, which led to lower target annual incentive amounts as compared to the market median for comparable positions to those held by the named executive officers at the end of 2018.

For illustrative purposes, the table below compares the target 2018 annual incentive award for each of the Company's currently serving named executive officers to the median annual incentive target

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set by companies within the Company's 2019 peer group for their executive officers holding positions comparable to those held by our named executive officers at the end of 2018:

Named Executive
Officer



2018 Annual
Incentive
Target



Peer Group
Market
Median(1)



Percentage of
Market
Median(1)

R.J. McNally

  $477,000   $1,105,000   43%

J.S. Smith

  $112,000   $473,000   24%

E.R. Centofanti

  $138,600   $429,500   32%

D.M. Jenkins

  $203,220   $429,500   47%

J.M. Lushko

  $117,840   $294,000   40%

 

 

 

 

 

 

 

(1)
The peer group market median is the median annual incentive target set by companies within the Company's 2019 peer group for their executive officers holding positions comparable to those of our named executive officers as of the end of 2018. For Mr. Lushko, the market median was determined by reference to broader industry data due to unavailability of comparable peer group data.

2018 Annual Incentives – Executive STIP

The Committee established as the 2018 performance metric "adjusted 2018 EBITDA" compared to the Company's 2018 business plan, which the Company has used as its annual performance metric since the 2009 plan year, as an objectively determinable performance measure for the 2018 plan year at the beginning of 2018 due to the following:

    Performance against this measure results in an objectively determinable bonus pool amount.

    The Committee believes this measure drives the named executive officers to implement and exceed the Company's business plan, which embodies the strategic goals of the Company, and which the Committee believes ultimately will create long-term value for shareholders.

    Cash flow measures, such as EBITDA, are often utilized by capital intensive companies and their investors as an indicator of such companies' performance, including their ability to fund their activities and service their debt.

Adjusted 2018 EBITDA (see Appendix A to this CD&A for the definition of, and additional information about, this non-GAAP measure) was calculated consistent with GAAP line items but used constant commodity prices and excluded certain charges. Commodity prices are held constant to avoid the undue positive or negative effect of prices that are beyond the control of plan participants and may be volatile. In order to hold commodity prices constant, the Committee adjusts actual results for, among other things, derivatives, basis and fixed price sales. Under the plan, the Committee is required to adjust for certain extraordinary items, typically those that are unusual or strategic in nature (e.g., certain large acquisitions and dispositions, debt repurchases and certain impairments), to encourage the executives to make the best decision or recommendation for the Company without regard to the executive's compensation when considering these types of extraordinary items. In consideration of the Spin-off, which closed in November 2018, in measuring adjusted 2018 EBITDA for purposes of both the Executive STIP and the headquarters portion of the Regular STIP (and adjusted 2018 EBITDAX for purposes of the production business unit portion of the Regular STIP, as discussed below), the Committee determined to measure actual financial results of the Company through October 31, 2018, plus two months (November and December 2018) of forecasted financial results to afford a meaningful comparison to the Company's 2018 business plan. The Committee also has the discretion, but not the obligation, to adjust for items not contemplated in the original business plan, to avoid undue

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negative effects on possible bonus amounts. The Committee did not exercise the discretion to make these adjustments, in light of the Company's third quarter 2018 capital expenditures and operational performance relative to business plan.

2018 Funding under the Executive STIP

Under the Executive STIP, a pool to pay bonuses to the Company's eligible officers was funded based upon adjusted 2018 EBITDA relative to business plan, as follows:

ADJUSTED 2018 EBITDA
COMPARED TO BUSINESS PLAN


PERCENTAGE OF ADJUSTED 2018 EBITDA AVAILABLE FOR ALL EXECUTIVE OFFICERS 2018 ANNUAL INCENTIVE AWARDS
At or above plan   2%
<5% below plan   1.5%
<25% below plan   1%
>25% below plan   No bonus

The Company's adjusted 2018 EBITDA of $3,527.9 million was 98.9% of its 2018 business plan EBITDA of $3,566.0 million, which resulted in the total 2018 pool for all participants under the Executive STIP being capped at 1.5% of adjusted 2018 EBITDA.

After determining the pool available for distribution, the Committee determined the value of the award to each eligible named executive officer based upon consideration of the individual's 2018 target annual incentive award and 2018 performance with respect to Company, business unit, and individual value drivers, which are discussed below.

Generally, the Committee aims to award between zero and three times the value of a named executive officer's target award, but may award up to $5 million to each named executive officer, subject to the overall cap (which maximum amount the Committee has never awarded). The Committee believes that this structure provides flexibility to reward superior individual performance in years of superior company performance and appropriately recognize exceptional efforts in the face of goals established at a challenging threshold. Further, the Committee historically has not had, and for the 2018 plan year did not have, discretion to pay a higher amount under the Executive STIP than specified by the objective formula under the Executive STIP.

The Committee is permitted to exercise, and historically has exercised, downward discretion in determining the actual payout under Executive STIP. The Committee exercised this discretion again in respect of the payouts that could otherwise have been made in respect of the 2018 plan year, distributing less than $1.3 million, in the aggregate, to the three named executive officers (Messrs. McNally and Jenkins and Ms. Smith) who participated in the Executive STIP for 2018, although the Executive STIP pool funded at $52.9 million.

The Committee also considered, but elected not to grant, "true up" grants that would otherwise have raised their target opportunities commensurate with their increased levels of executive responsibilities upon their promotions to their senior executive leadership positions. See the Summary Compensation Table below for the amount awarded to each eligible named executive officer for 2018.

2018 Annual Incentives – Regular STIP

Ms. Centofanti and Mr. Lushko, who were not executive officers at the beginning of 2018, participated in the production business unit portion and the headquarters portion, respectively, of the Regular STIP in 2018.

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2018 Funding under the Regular STIP

Under the production business unit portion of the Regular STIP (i.e., the portion in which Ms. Centofanti participated in 2018), the incentive pool was established by adjusting the target incentive pool that was approved by the Committee for the production business unit by a formula based on the production business unit's adjusted 2018 business unit EBITDAX (a non-GAAP measure, calculated as set forth in Appendix A to this CD&A), compared to the Company's business plan, as follows:

ADJUSTED 2018 BUSINESS UNIT EBITDAX
COMPARED TO BUSINESS PLAN


PAYOUT MULTIPLE*

At or above plan

  1.00
90% of Business Plan Adjusted EBITDAX   0.75
80% of Business Plan Adjusted EBITDAX   0.50

*
Payout multiples are interpolated between levels depending upon performance.

The above result then is adjusted based on business unit value drivers (operational, strategic and financial goals), by adding to it the sum of the amounts, if greater than zero, determined by multiplying the applicable payout multiple for each value driver by the original target incentive pool amount, as follows:

BUSINESS UNIT VALUE DRIVER
RESULTS


PAYOUT MULTIPLE*
Stretch   2.00 times the weighted value of the value driver
Exceeds   1.00 times the weighted value of the value driver
Successful   Zero times the weighted value of the value driver
Fails to meet expectations   Negative 1.00 times the weighted value of the value driver

*
Individual business unit value drivers are weighted by the Committee based on their relative importance to achieving the Company's operational, strategic and financial goals.

Under the headquarters portion of the Regular STIP (i.e., the portion in which Mr. Lushko participated in 2018), a formula based on the Company's adjusted 2018 EBITDA compared to the Company's business plan establishes 60% of the incentive pool, as follows:

ADJUSTED 2018 EBITDA
COMPARED TO BUSINESS PLAN


PAYOUT MULTIPLE*
More than 10% above plan   Committee Discretion

10% above plan

  2.00

5% above plan

  1.25

5% below plan

  0.50
More than 5% below plan   No payment

*
Payout multiples are interpolated between levels depending upon performance.

Business unit value drivers (operational, strategic and financial goals) establish the remaining 40% of the headquarters portion of the Regular STIP incentive pool available for payouts, as follows:

BUSINESS UNIT VALUE DRIVER
RESULTS


PAYOUT MULTIPLE
Stretch   3.00
Exceeds   2.00
Successful   1.00
Fails to meet expectations   No Payment

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The Regular STIP provides that the annual awards are paid in cash, subject to the Committee's discretion to pay in equity. Additionally, the Company's Chairman of the Board may elect to settle awards in equity rather than cash if a participant has not satisfied his or her applicable equity ownership guidelines.

2018 funding of the production business unit and headquarters pools under the Regular STIP was determined based on the following:

    The Company's production business unit's adjusted 2018 business unit EBITDAX of $2,402.6 million represented 99.7% of the Company's 2018 production business plan EBITDAX of $2,411.1 million.

    The Company's adjusted 2018 EBITDA of $3,527.9 million represented 98.9% of the Company's 2018 business plan EBITDA of $3,566.0 million.

2018 Annual Incentive Payouts under the Executive STIP and Regular STIP

Under the Executive STIP and Regular STIP, the Company also considers each executive officer's achievement of individual value driver performance goals that are established at the beginning of each year. The Committee reviewed the individual performance of each named executive officer who was serving at the end of 2018 based on the following:

    a review of Mr. McNally's performance conducted by the Corporate Governance Committee and the Chair of the Committee and reviewed with the other directors (to support this review, Mr. McNally provides a self-assessment to the Corporate Governance Committee and the Chair of the Committee, and input is requested from the independent Chairman and other directors); and

    a report by Mr. McNally regarding the performance of each other named executive officer.

In assessing the value driver performance of each eligible named executive officer, the Committee considered, among other matters, the efforts on a number of important transactions, including the Spin-off, and performance against key operational and strategic goals, as described below.

The following are the highlights of 2018 performance for each named executive officer (executive officers who were no longer employed at year-end, and consequently did not receive a bonus for 2018, are not included in the table):

NAMED
EXECUTIVE
OFFICER



2018 PERFORMANCE HIGHLIGHTS
R.J. McNally   Mr. McNally became the Company's President and Chief Executive Officer and a member of the Board of Directors in November 2018, effective upon the closing of the Spin-off. Prior to becoming President and Chief Executive Officer, Mr. McNally also had responsibility for business development, facilities, information technology, innovation, and procurement in addition to his prior responsibilities for finance and related functions, accounting, tax, and internal audit functions. Mr. McNally's annual incentive award recognized his performance on Company, business unit, and individual value drivers in 2018, including:

 

the successful transition from his role as Chief Financial Officer to President and Chief Executive Officer;

   

achieving immediate cost savings across the organization in the fourth quarter through an effective human capital and operational process review and efficiency analysis;

   

leading the "sum of the parts" analysis and discussions with the Board, ultimately resulting in the successful Spin-off of the midstream business, an extraordinarily complex transaction which EQT successfully executed on an expedited timeframe;

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NAMED
EXECUTIVE
OFFICER



2018 PERFORMANCE HIGHLIGHTS
   

completing a series of midstream streamlining transactions in anticipation of the Spin-off, including: the sale of midstream assets to EQM for approximately $1.5 billion in cash and common units; the acquisition by EQGP of RMP's incentive distribution rights (IDRs) for EQGP units valued at approximately $940 million; EQM's acquisition of RMP; and leading negotiations on the acquisition of Gulfport Midstream Holdings, LLC's 25% interest in the Strike Force Gathering System for $175 million ("the Gulfport Transaction");

   

leading various significant financing transactions, including: arranging a $2.5 billion term loan for EQM and subsequent refinancing of the term loan through EQM's issuance of $2.5 billion of long-term debt; arranging an upsizing of the EQM credit facility to $3 billion (from $1 billion); and arranging a $100 million credit facility for ETRN in anticipation of the Spin-off;

   

leading the team responsible for structuring and creating a post-Spin-off EQT and ETRN;

   

leading the analysis and execution of the sale of the Huron and Permian assets, resulting in $0.8 billion of proceeds and the transfer of significant plugging liabilities to the purchaser;

   

continuing successful tax planning initiatives;

   

leadership on achieving other EQT and business unit value drivers; and

   

engaging in extensive shareholder outreach efforts.


 

 

Mr. McNally's leadership was crucial to the successful completion of the Spin-off, especially in light of the changes at the level of Chief Executive Officer during the time the Spin-off was being implemented. The Committee also took into account the Company's third-quarter 2018 capital expenditures and operational performance relative to business plan.

J.S. Smith

 

Ms. Smith became the Company's Senior Vice President and Chief Financial Officer in November 2018, effective upon the closing of the Spin-off. Prior to assuming the role of Chief Financial Officer, Ms. Smith served as the Company's Chief Accounting Officer. Ms. Smith's annual incentive award recognized her performance on Company, the business unit, and individual value drivers in 2018, including:

 

successfully transitioning from her role as Chief Accounting Officer to Chief Financial Officer;

 

providing financial reporting expertise to the complex transactions required to effect the midstream simplification, including: the sale of the Rice Energy retained midstream assets to EQM, the sale of the RMP's IDRs to EQGP, the EQM-RMP merger, the Gulfport Transaction, and the recast of EQM's financial statements to support the $2.5 billion EQM debt offering;

 

overseeing significant financial statement requirements necessary to complete the separation of the midstream business, including definition of the accounting predecessor and completion of historical Spin-off financial statements, acquisition financial statements for Rice Midstream Holdings LLC, completion of the Form 10 filing with the SEC, including minimizing comments from the SEC to expedite time to effectiveness, and completion of discontinued operations reporting for the remaining upstream business;

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NAMED
EXECUTIVE
OFFICER



2018 PERFORMANCE HIGHLIGHTS
 

splitting the EQT accounting and financial systems and processes to support the Spin-off;

 

providing analysis and support for the sale of the Huron and Permian assets, resulting in $0.8 billion of proceeds and the transfer of significant plugging liabilities to the purchaser;

 

completing the accounting and tax integration for the acquisitions of assets from Trans Energy, Inc., Stone Energy Corporation and Rice.



 

Ms. Smith's expertise in financial reporting and leadership were critical in the successful completion of the Spin-off. The Committee also took into account the Company's third quarter 2018 capital expenditures and operational performance relative to business plan.

D.M. Jenkins

 

Mr. Jenkins became the Company's Executive Vice President, Commercial, Business Development, Information Technology and Safety in November 2018. Prior to assuming this executive leadership role, Mr. Jenkins served as the Company's Chief Commercial Officer. Mr. Jenkins' annual incentive award recognized his performance with respect to the Company, the business unit, and individual value drivers in 2018, including:

 

an improved employee safety performance;

   

the successful transition from his role as Chief Commercial Officer to a newly created role which added Business Development, Information Technology and Safety to his management responsibilities;

   

presenting and receiving approval for an updated hedge policy and strategy from the Company's risk committee;

   

expanding and executing successful trading transactions that allowed the Company to exceed net margin financial targets for the function;

   

implementing process efficiencies in the trading function;

   

coordinating and presenting underlying fundamentals of energy markets, including detailed analysis of North American natural gas supply and demand over the next ten years and its impact on demand and takeaway capacity in the Appalachian Basin;

   

negotiating new contracts as needed and meeting financial targets established; and

   

maintaining efficient cost structure while managing a significant increase in marketed volumes.


 

 

Mr. Jenkins' commercial management and risk management skills were critical in the successful completion of the Spin-off.

E.R. Centofanti

 

During the portion of 2018 prior to her promotion in October 2018 to Executive Vice President, Production, Ms. Centofanti served as Senior Vice President of Asset Development for EQT Production. Her annual incentive award recognized her performance on various production business unit value drivers in 2018, including:

 

the successful transition from Senior Vice President of Asset Development to Executive Vice President of Production;

 

effective human capital and operational process review and efficiency analysis resulting in significant cost savings across the Production organization in the fourth quarter;

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NAMED
EXECUTIVE
OFFICER



2018 PERFORMANCE HIGHLIGHTS
 

providing support in driving strong operational results, including volume growth of 68% over 2017 and a 102% increase in adjusted operating cash flow;

 

increasing proved reserves by 2% up to 21.8 Tcfe(1) and PV10(2) cash flow by 2.6 billion or 29%;

 

her leadership on the implementation of key technology across the Asset Development team following the Rice Energy acquisition;

 

the acquisition of approximately 30,000 acres through trades and leasing to support the 2018 drilling program and beyond; and

 

her leadership on achieving other EQT and business unit value drivers.


 

 

Ms. Centofanti's leadership on technical production matters was critical in supporting the development of the Company's plans for increasing operating and capital efficiencies, key priorities for the Company in 2019. The Committee also took into account the Company's third quarter 2018 capital expenditures and operational performance relative to business plan.

J.M. Lushko

 

During the portion of 2018 prior to his promotion in October 2018 to General Counsel and Senior Vice President, Government Affairs, Mr. Lushko served as Deputy General Counsel, Governance & Enterprise Risk. His annual incentive award recognized his performance of legal-related value drivers in 2018, including:

 

successfully transitioning from his role as Deputy General Counsel, Governance & Enterprise Risk to Senior Vice President and General Counsel;

   

managing the legal and governance aspects of the "sum of the parts" analysis and discussions with the Board;

   

providing legal and governance expertise to the complex transactions required to effect the midstream simplification, including: the sale of the Rice Energy retained midstream assets to EQM; the sale of RMP's IDRs to EQGP; the EQM-RMP merger; the Gulfport Transaction; and EQM's $2.5 billion debt offering;

   

leading the legal and governance aspects of the Spin-off, including subsidiary restructuring, completion of the Form 10 filed with the SEC and negotiation of key transaction documents;

   

completing integration work for acquisitions in 2017 and 2018; and

   

conducting a bottom-up, corporate-wide risk refresh.


 

 

Mr. Lushko's leadership on legal and governance matters was critical to the successful completion of the Spin-off.

(1)
Tcfe = trillion cubic feet of natural gas equivalents, with one barrel of NGLs and crude oil being equivalent to 6,000 cubic feet of natural gas.

(2)
PV10 = the present value of estimated future oil and gas revenues net of estimated direct expenses and discounted at an annual discount rate of 10%.

Following its review of overall Company financial performance, the Committee exercised downward discretion in determining the actual award payable to each eligible named executive officer for 2018, taking into consideration the named executive officer's performance with respect to the Company, the business unit, and individual value drivers. Although the Executive STIP pool funded at $52.9 million, the Committee distributed less than $1.3 million, in the aggregate, to Messrs. McNally and Jenkins and Ms. Smith, the three named executive officers who participated in the Executive STIP for 2018.

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The Senior Vice President, HR, in consultation with the Company's Chief Executive Officer, determined the annual incentive awards under the Regular STIP for Ms. Centofanti and Mr. Lushko, which, in the aggregate, totaled less than $0.5 million.

Finally, as described in the "Management Development and Compensation Committee Highlights" section above, the Committee determined to not pay any 2018 annual incentive awards to the named executive officers who departed during 2018.

Strategic Incentive Awards

In recognition of the management team's efforts through March 2018, and to incentivize management's effort and focus on execution of the complex Spin-off transaction during 2018, the Committee awarded one-time "Strategic Implementation Awards" to various senior executives, including Messrs. McNally, Lushko, Schlosser and Ashcroft and Ms. Smith, in March 2018. These awards included both a cash and equity component. The cash component is reflected in the Bonus column of the Summary Compensation Table below. See the "Long-Term Incentives – Strategic Incentive Awards" section below for further discussion of both the cash and equity component of these awards.

2019 Target Annual Incentive Awards

2019 annual incentives will be funded, structured and determined similarly to the 2018 annual incentives. After consideration of the factors used to establish prior annual incentive programs, in December 2018, the Committee selected adjusted 2019 EBITDA relative to the Company's business plan as the applicable performance measure for purposes of the 2019 plan year of the Executive STIP. Consistent with the 2018 annual incentive program, adjusted 2019 EBITDA (see Appendix A to this CD&A for the definition of, and additional information about, this non-GAAP measure) will be calculated consistent with GAAP line items but will use constant commodity prices and exclude certain items (e.g., large acquisitions and dispositions, debt repurchases and impairments). Under the Executive STIP, the pool available for all executive officer incentive awards will be funded based upon adjusted 2019 EBITDA relative to the 2019 business plan consistent with the funding schedule for the 2018 plan year. Also consistent with 2018 and prior years, after determining the pool available for distribution for 2019, the Committee will determine the value of the award to each named executive officer who remains with the Company at such time based upon consideration of the individual's 2019 target award and 2019 performance on Company, business unit, and individual value drivers, and subject to the Committee's ability to exercise downward discretion to reduce actual payouts.

Long-Term Incentives

Overview of 2018 Long-Term Incentive Awards

The Committee aims for a balanced set of awards that motivate operational achievement, risk management, and a commitment to excellence, all of which the Committee believes ultimately contribute to long-term value creation for shareholders.

The 2018 long-term incentive compensation structure for the named executive officers was more complex than in prior years due to the senior executive leadership changes that occurred during 2018, coupled with the Company's ordinary timing for deciding and awarding long-term incentives. Specifically, the Committee typically completes the long-term incentive program design in late Fall of the preceding year, approving target long-term incentive awards in December with a January 1 grant date.

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As a result, in January 2018, Messrs. McNally, Jenkins, Schlotterbeck, Schlosser and Ashcroft and Ms. Smith received the long-term incentive awards designed for our most senior executive officers, while Mr. Lushko and Ms. Centofanti received the long-term incentive awards designed for senior leaders in the executive level immediately below most executive officers (next tier senior leadership).

In connection with the promotions of Mr. Lushko and Mses. Smith and Centofanti to senior executive leadership positions in late 2018, the Committee considered, but elected not to grant, "true up" grants that would otherwise have raised their target opportunities commensurate with their increased levels of executive responsibilities.

In developing the 2018 long-term incentive program, the Committee designed a program that the Committee believed would align the interests of the named executive officers with the interests of shareholders, drive appropriate performance, be market competitive, be effective for retention purposes, be tax efficient, minimize earnings volatility, and result in a portfolio approach to performance metrics. The Committee's considerations also included:

    market data regarding the long-term incentive design at the 2017 peer group;

    the appropriate way to incentivize executives toward the success of the Company and, prior to the Spin-off, EQGP and EQM;

    the portfolio of existing long-term incentive programs and their combined influence on focusing executive behavior on critical activities;

    feedback received from shareholders during the Company's annual outreach program and in conjunction with the announcement of the Rice Transaction;

    the availability of EQT shares under the Company's 2014 2014 LTIP; and

    the views of the larger proxy advisory services.

The process involved consideration of the pros and cons of multiple variations of long-term incentive programs.

2018 Long-Term Incentive Award Mix

As a result of its analysis, with input from Pay Governance, the 2018 long-term incentive compensation program designed by the Committee for most executive officers and for next tier senior leadership was as follows:

TYPE OF
AWARD


PERCENT OF
AWARDED
VALUE –
MOST SENIOR
EXECUTIVE
OFFICERS






PERCENT OF
AWARDED
VALUE –
NEXT TIER
SENIOR
LEADERSHIP






RATIONALE AND DESCRIPTION
Stock Options   25%   None   EQT stock options encourage executives to focus broadly on behaviors that the Committee believes should lead to a sustained long-term increase in the price of EQT shares, which benefits all shareholders.

 

 

 

 

 

 

Stock options cliff vest after three years and have a 10-year term.

 

 

 

 

 

 

 

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TYPE OF
AWARD


PERCENT OF
AWARDED
VALUE –
MOST SENIOR
EXECUTIVE
OFFICERS






PERCENT OF
AWARDED
VALUE –
NEXT TIER
SENIOR
LEADERSHIP






RATIONALE AND DESCRIPTION
Restricted Share Awards   25%   25%   EQT restricted share and unit awards are a strong retention tool for executives that also align their interests with the long-term interests of shareholders, though such awards contain less leverage than options and performance units. The Committee retained this element in the long-term incentive program design for 2018 after considering market data showing the continued prevalence of restricted shares/units used as a retention tool by many members of the 2017 peer group.

 

 


 


 

Restricted share awards cliff vest after three years.

 

 

 

 

 

 

 
2018 Incentive PSU Program   50%   25%   2018 Incentive PSU Program performance units drive long-term value directly related to EQT performance by using operating efficiency, development efficiency, return on capital employed, and relative stock performance as performance metrics. All metrics utilize a three-year performance period.

 

 

 

 

 

 

In prior years, the comparable performance program focused on relative stock performance and absolute natural gas sales volume growth; however, volume metrics were removed in response to shareholder feedback and replaced by efficiency and return metrics to align with our strategic plan.

 

 

 

 

 

 

 
2018 Value Driver PSU Program   None   50%   2018 Value Driver PSU Program performance units drive the focus of next tier senior leadership on activities aligned with the Company's business plan and on Company, business unit, and individual value drivers, which activities the Committee believes are critical to EQT's long-term success.

 

 


 


 

Value Driver PSUs are earned based on the achievement of a pre-set adjusted EBITDA goal and vest ratably over two years.

 

 

 

 

 

 

 

The award mix for the 2018 long-term incentive program for its senior executive officers at the beginning of the year, composed of stock options, time-based restricted shares and other performance-based awards, reaffirms the Committee's desire to incorporate time-based restricted shares on a limited basis while continuing the Committee's historic emphasis on performance-based incentive compensation. Similarly, the allocation of the 2018 long-term incentive program for its next tier senior leadership at the beginning of the year among time-based restricted share units and performance-based awards reflects the Committee's commitment to performance-based, at-risk compensation, coupled with its focus on market data for comparably situated executives.

The Committee believes that the overall mix of award types for both groups of executives provides a balanced set of incentives that motivate operational achievement, risk management, and a

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commitment to excellence, all of which the Committee believes ultimately contribute to long-term value creation for shareholders.

2018 Long-Term Incentive Award Performance Measures

In developing the performance measures for the 2018 long-term incentive program, the Committee worked to identify performance metrics designed to focus employees on the efficient development of the Company's vast resources that would replace absolute natural gas sales volume growth in the Company's long-term incentive programs.

Further, following the announcement of the Rice Transaction, some shareholders raised concerns about the Company's prior focus on volumes and expressed a desire for the Company to include a return metric within the long-term programs. This shareholder input was considered by the Committee and reflected in the design of the 2018 program.

2018 Incentive PSU Program

The Committee strongly supported management's vision to shift employee focus to maintaining an industry-leading cost structure, as evidenced by its discussion of the specific metrics and appropriate performance targets and weighting over multiple meetings. The resulting performance measures and their weighting under the 2018 Incentive PSU Program, based on the Company's performance over the period January 1, 2018 through December 31, 2020, consist of the following:

PERFORMANCE
MEASURE


WEIGHTING

DESCRIPTION AND RATIONALE
Relative TSR   50%  

Measures TSR relative to the 2018 peer group of companies over the performance period.

     

Forges a direct link to shareholder performance on a relative rather than absolute basis.

     

The Committee believes this metric is an important indicator of the Company's success in achieving its strategic objectives.

     

Performance goal and payout factor set forth on Appendix C to this proxy statement.

Operating Efficiency   25%  

Measures the Company's efficiency (on a per Mcfe produced basis) in operating expenses (selling, general and administrative expenses, production expense (less production taxes) and operation and maintenance expense) over the performance period.

 

 

The baseline was set to the Company's forecasted 2017 operation efficiency and adjusted for the synergies committed to in the Rice Transaction.

 

 

Focuses employee attention on achieving the anticipated synergies in conjunction with the Rice Transaction and managing costs so that the Company continues to have an industry-leading cost structure.

 

 

Performance goal and payout factor set forth on Appendix C to this proxy statement.


 

 

 

 

 

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PERFORMANCE
MEASURE


WEIGHTING

DESCRIPTION AND RATIONALE
Development Efficiency   25%  

Measures the Company's efficiency (on a per Mcfe developed basis) in capital spending on wells SPUD and turned-in-line over the performance period.

     

The baseline was set to the forecasted 2017 development efficiency plus the synergies committed to in the Rice Transaction.

     

Focuses employee attention on achieving the anticipated synergies in conjunction with the Rice Transaction and managing costs so that the Company continues to have an industry-leading cost structure.

     

Performance goal and payout factor set forth on Appendix C to this proxy statement.


 

 

 

 

 
Return on Capital Employed   +/- 10% Modifier  

Measures the Company's return over the performance period and modifies overall performance by up to 10% either upward or downward.

 

 

Ensures participants are focused on overall return to shareholders.

 

 

This metric was added in direct response to shareholder feedback following the announcement of the Rice Transaction.

 

 

Performance goal and modifier set forth on Appendix C to this proxy statement.


 

 

 

 

 

In establishing the payout matrices for the 2018 Incentive PSU Program, the Committee considered their alignment with the Company's historical and projected growth and synergy targets related to the Rice Transaction. The analysis behind the selection of the 2018 peer group is described above under "Benchmarking." Following discussion with its independent compensation consultant, the Committee concluded that the payout matrices (which are disclosed as set forth in Appendix C to this proxy statement) would provide rewards appropriate to performance and were appropriately rigorous.

2018 Value Driver PSU Program

The performance measure for the 2018 Value Driver PSU Program (in which only Ms. Centofanti and Mr. Lushko participated, in light of their participation prior to being promoted in 2018) was the Company's adjusted 2018 EBITDA compared to the 2018 business plan. The payout opportunity under the 2018 Value Driver Program was:

    no payout if the adjusted 2018 EBITDA was less than the Company's business plan; or

    three times the number of target awards granted if the adjusted 2018 EBITDA equaled or exceeded the business plan, subject to the Committee's discretion to determine that a lower performance multiple applied. In exercising its discretion, the Committee was to consider and be guided by performance on Company, business unit, and individual value drivers.

In connection with the Spin-off, the Committee deemed the adjusted 2018 EBITDA performance measure to be satisfied for purposes of the 2018 Value Driver PSU Program, as reflected in the terms of the Employee Matters Agreement, dated November 12, 2018, between the Company and

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ETRN. However, as described above, the Committee exercised downward discretion to confirm for each of Ms. Centofanti and Mr. Lushko a below-maximum award based upon the individual's 2018 target award and 2018 performance on Company, business unit, and individual value drivers (which included, in the case of Ms. Centofanti, taking into account the Company's third quarter 2018 capital expenditures and operational performance relative to business plan).

2018 Stock Options and Restricted Shares

The stock options granted in January 2018 have a term of ten years and were granted with an exercise price of $56.92 per share (which was adjusted to $29.30 per share pursuant to the Spin-off – see "Stock Options" under "Treatment of Equity-Based Compensation in the Spin-off" below). These options will vest on January 1, 2021, contingent upon continued service with the Company through such date.

The restricted shares granted in January 2018 will vest on January 1, 2021, contingent upon continued service with the Company through such date.

2018 Target Long-Term Incentive Awards

The Committee's considerations in determining the appropriate targets for each named executive officer for the 2018 long-term incentive awards are described above under the caption "Making Executive Compensation Decisions – Determining Target Total Direct Compensation." The resulting long-term incentive award to Mr. Schlotterbeck was at 80% of the market median (based on the 2018 peer group) for his position as President and Chief Executive Officer. For 2018, long-term incentive awards to the other named executive officers at such time averaged 87% of the market median (based on the 2018 peer group).

The number of stock options, restricted shares and target units under the 2018 Incentive PSU Program awarded to the named executive officers were as follows:

NAMED EXECUTIVE
OFFICER



2018
OPTIONS





2018
RESTRICTED
SHARES







2018
INCENTIVE
PSU
PROGRAM









2018
VALUE
DRIVER
PSU
PROGRAM
 

R.J. McNally

  40,200     12,030     24,060     -  

J.S. Smith

  6,800   2,030   4,060   -  

E.R. Centofanti

  -     2,270     2,270     4,530  

D.M. Jenkins

  8,800   2,640   5,280   -  

J.M. Lushko

  -     2,040     2,040     4,080  

D.L. Porges

  -


-


-

-  

S.T. Schlotterbeck

  108,500     32,510     65,010     -  

D.E. Schlosser, Jr.

  41,900   12,550   25,090   -  

J.J. Ashcroft

  41,900     12,550     25,090     -  

As described above under the caption "Making Executive Compensation Decisions – Determining Target Total Direct Compensation," the Committee determined in early 2018 that the target 2018 long-term incentive awards for each named executive officer serving as an executive officer at such time would be subject to a 13.5% reduction in the event the anticipated Rice Transaction first-year operating or development synergies are not achieved. The entirety of any reduction would be taken from the 2018 Incentive PSU Program awards to avoid the accounting costs associated with turning the options or restricted shares into performance-based awards. As a result, the 2018 Incentive PSU Program awards identified above are subject to a potential 27% reduction in the event such first-year synergies are not achieved.

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Messrs. Schlosser and Ashcroft vested in their outstanding long-term equity awards in connection with their termination of employment and will receive the benefit, if any, of the 2018 Incentive PSUs to the extent and at the same time as other holders thereof. Mr. Schlotterbeck forfeited the long-term incentive awards that were granted to him in 2018 upon his resignation in March 2018.

Strategic Incentive Awards

The separation of EQT's upstream and midstream businesses through the Spin-off was an extraordinarily complex transaction, which EQT successfully executed on an expedited timeframe. This complexity was compounded by EQT's work to create long-term value for EQT's shareholders through the integration of its business with the business of Rice Energy.

In determining compensation for 2018, the Committee believed that it was important to have a stable, focused and experienced leadership team throughout this process. Accordingly, in recognition of the management team's efforts through March 2018, and to incentivize future efforts, the Committee approved Strategic Implementation Awards for Messrs. McNally, Jenkins, Lushko, Schlosser and Ashcroft and Ms. Smith in March 2018.

With a focus on retaining this team and on incenting future performance, the Strategic Implementation Awards for the named executive officers mentioned above (other than Mr. Lushko, who was not an executive officer at the time of grant) were paid one-third in cash, with the remaining two-thirds granted in the form of additional performance share units (PSUs), which would vest (i) 50% on the later of the first anniversary of the grant date and the date of the Spin-off and (ii) 50% on the second anniversary of the grant date, subject to the earlier completion of the Spin-off. On February 12, 2019, the Committee certified that the performance condition (i.e., successful closing of the Spin-off) had been satisfied. The PSUs would have been forfeited in their entirety if the Spin-off had not occurred by the second anniversary of the grant date. The Strategic Implementation Award for Mr. Lushko was similarly paid one-third in cash; however, consistent with the awards to the next tier senior leadership, Mr. Lushko received the remaining two-thirds of his award in the form of Restricted Stock Units, which vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. In total, the named executive officers in 2018 received the following amounts under the Strategic Implementation Award Program:

NAMED EXECUTIVE OFFICER




CASH
($)




PSUS
(# OF SHARES)




RSUS
(# OF SHARES)
 

R.J. McNally

  $ 250,000     10,060     -  

J.S. Smith

  33,333   1,350   -  

D.M. Jenkins

    166,667     6,710     -  

J.M. Lushko

  66,667   -   2,600  

D.E. Schlosser, Jr.

    166,667     6,710     -  

J.J. Ashcroft

  50,000   2,020   -  

Certification of Performance Under Previously Awarded Long-Term Incentive Programs

In early 2018, the Committee certified the relevant performance and authorized payout for the 2015 Executive Performance Incentive Program (the "2015 Incentive PSU Program") (after excluding production from Rice Energy wells producing as of the transaction closing date) and the 2017 Value Driver PSU Program (which by its terms excluded the impact of acquisitions of greater than $100 million). In early 2019, the Committee certified the relevant performance and authorized payout for the 2016 Incentive PSU Program and the 2018 Value Driver PSU Program.

December 31, 2018 was the natural end of the performance period under the 2016 Incentive PSU Program. The payout for the 2016 Incentive PSU Program was calculated using a payout multiple of 1.85X based on the Company's actual TSR ranking and the Company's compound annual production sales volume growth during the performance period.

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2019 Long-Term Incentive Awards

In developing the 2019 long-term incentive program, the Committee designed a program that would align the interests of the Company's named executive officers with the interests of shareholders, would drive appropriate performance, be market competitive, be effective for retention purposes, be tax efficient, minimize earnings volatility, and result in a portfolio approach to performance metrics. The Committee's considerations also included:

    market data regarding the long-term incentive design at the 2018 peer group;

    the appropriate way to incentivize executives toward the success of the Company;

    the portfolio of existing long-term incentive programs and their combined influence on focusing executive behavior on critical activities;

    feedback received from shareholders during the Company's annual outreach program and in conjunction with the announcement of the Rice Transaction;

    the availability of EQT shares under appropriately approved plans; and

    the views of the larger proxy advisory services.

The process involved consideration of the pros and cons of multiple variations of long-term incentive programs. As a result of its analysis, and with input from Pay Governance, the 2019 long-term incentive compensation program designed by the Committee for the named executive officers consisted of stock options (25%), restricted share awards (25%), and 2019 Incentive Performance Share Unit Program performance units (50%).

The allocation of the 2019 long-term incentive program among stock options, time-based restricted shares and other performance-based awards reaffirms the Committee's desire to incorporate time-based restricted shares on a limited basis while continuing the Committee's historic emphasis on performance-based incentive compensation. As noted, the Committee aims for a balanced set of awards that motivate operational achievement, risk management, and a commitment to excellence, all of which the Committee believes ultimately contribute to long-term value creation for shareholders.

Management and the Committee again worked to identify performance metrics designed to focus employees on the efficient development of the Company's vast resources, as a pure-play natural gas production company. The Committee continued to strongly support management's vision to focus employees on achieving operating and capital efficiencies, discussing the specific metrics and appropriate performance targets and weighting over multiple meetings, and obtaining feedback from the Operating and Capital Efficiency Committee of the Board regarding the appropriate performance measures and metrics. The resulting performance measures and their weighting under the 2019 Incentive PSU Program are the Company's performance over the period January 1, 2019 through December 31, 2021 on Relative TSR (weighting of 50%), Operating Efficiency (weighting of 25%), Development Efficiency (weighting of 25%) and a Return on Capital Employed modifier, which modifies the performance on all other metrics by up to 10% based upon performance (see Appendix C to this proxy statement for the performance and payout matrices under the 2019 Incentive PSU Program).

The stock options granted in January 2019 have a term of ten years and an exercise price of $18.89 per share. The stock options will vest on January 1, 2022, contingent upon continued service with the Company through such date.

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The restricted shares granted in January 2019 will vest on January 1, 2022, contingent upon continued service with the Company through such date.

Consistent with 2018, the 2019 long-term incentive programs for its named executive officers contemplate payment in EQT equity, which the Committee believes further aligns the interests of the named executive officers with those of shareholders and allows favorable, non-variable accounting treatment.

In January 2019, each of the Company's named executive officers who remained employed by the Company received the long-term incentives designed for senior executive officers described above.

The Committee's considerations in determining the appropriate targets for the 2019 long-term incentive awards are described above under the caption "Making Executive Compensation Decisions – Determining Target Total Direct Compensation." The resulting target long-term incentive award to Mr. McNally was at 89% of the market median (i.e., the Company's 2019 peer group) for his position as President and Chief Executive Officer. The long-term incentive awards to the other named executive officers who remained with the Company at such time averaged 85% of the market median (i.e., the Company's 2019 peer group) for each of their comparable positions. The number of options, restricted shares and target units under the 2019 Incentive PSU Program awarded to the named executive officers at such time were as follows:

NAMED EXECUTIVE
OFFICER



2019 OPTIONS

2019 RESTRICTED
SHARES


2019 INCENTIVE
PSU PROGRAM

  R.J. McNally

281,700 84,710 169,410

  J.S. Smith

88,100 26,470 52,940

  E.R. Centofanti

88,100 26,470 52,940

  D.M. Jenkins

88,100 26,470 52,940

  J.M. Lushko

51,100 15,360 30,710

Treatment of Equity-Based Compensation in the Spin-off

In connection with the Spin-off, and consistent with the Committee's desire to align the interests of all employees with the interests of the Company's stockholders – who also became stockholders of ETRN by virtue of the Spin-off – the Company's outstanding equity-based compensation awards were converted into equity-based awards in respect of each of the Company and ETRN, as described below.

Stock Options

Upon the closing of the Spin-off, each outstanding option to purchase shares of the Company's common stock (other than those held by former employees) was converted into an award of options to purchase both shares of the Company's common stock and shares of ETRN's common stock. Each outstanding option to purchase shares of the Company's common stock held by a former employee remained an award of options solely to purchase shares of the Company's common stock. The number of shares and exercise prices of each option award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original stock option as measured immediately before and immediately after the Spin-off, subject to rounding. The adjusted stock options are subject to substantially the same terms, vesting conditions, post-termination exercise rules and other restrictions that applied to the original stock options immediately before the Spin-off.

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Restricted Stock, Restricted Stock Units and Deferred Stock Awards

Upon the closing of the Spin-off, each outstanding award of Company restricted stock, restricted stock units (including all Strategic Implementation Awards denominated in shares of the Company's common stock), and deferred stock units (including awards granted pursuant to the 2017 Value Driver PSU Program), other than certain performance-based awards described below, was converted into an award in respect of both shares of the Company's common stock and shares of ETRN's common stock. The number of shares of the Company's common stock subject to each award is the same as the number subject to the award prior to the Spin-off, while the number of shares of ETRN's common stock subject to the award was determined based on the number of ETRN shares distributed per share of the Company's common stock in the Spin-off. The adjusted awards are subject to substantially the same terms, vesting conditions and other restrictions that applied to the original awards immediately before the Spin-off.

Performance-Based Awards

Upon the closing of the Spin-off, each outstanding award of Company restricted stock units granted pursuant to the Incentive PSU Programs for 2016, 2017 and 2018 or pursuant to the 2018 Value Driver PSU Program was converted into an award in respect of both shares of the Company's common stock and shares of ETRN's common stock. The number of shares of the Company's common stock subject to each award is the same as the number subject to the award prior to the Spin-off, while the number of shares of ETRN's common stock subject to the award was determined based on the number of shares of ETRN's common stock distributed per share of the Company's common stock in the Spin-off. The adjusted awards are subject to substantially the same terms, vesting conditions and other restrictions that applied to the original awards immediately before the Spin-off, except that:

    for awards granted pursuant to the 2018 Incentive PSU Program, one-third of the total number of shares subject to the awards will be earned based on actual performance as of December 31, 2018, after which date such portion of the awards will be subject to solely time-based vesting, and two-thirds of the total number of shares subject to the awards will be earned based on the same performance goals established by the Committee for the 2019 Incentive PSU Program; and

    for awards granted pursuant to the 2018 Value Driver PSU Program, (i) the EBITDA-based performance goal was deemed satisfied as of the Spin-off, and the satisfaction of the business unit value drivers and any other applicable performance goals were determined based on actual performance as of December 31, 2018 or the last date performance can be determined (in the case of awards denominated in respect of the Company's common stock) or September 30, 2018 (in the case of awards denominated in respect of ETRN common stock), and (ii) one-half of the award vested on December 31, 2018 and one-half of the award will vest on December 31, 2019.

Other Compensation Components

The Company provides modest, customary additional benefits to our named executive officers to enable them to focus on our business and enhance their commitment to us.

Health and Welfare Benefits

The named executive officers participate in the same health and welfare benefit plans offered to other EQT employees, including medical, prescription drug, dental, vision, short- and long-term disability, wellness and employee assistance programs. The same contribution amounts, deductibles and plan design provisions are generally applicable to all employees.

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Retirement Programs

The named executive officers participate in the same defined contribution 401(k) plan as other EQT employees. The Company has historically contributed an amount equal to 6% of each participant's base salary to an individual investment account for the employee, subject to applicable tax regulations. In addition, the Company matches a participant's elective contribution by contributing to the participant's individual investment account an amount equal to 50% of each dollar contributed by the employee, subject to a maximum Company contribution of 3% of the employee's base salary and applicable tax regulations.

Once Company contributions for named executive officers reach the maximum level permitted under the 401(k) plan, Company contributions are continued on an after-tax basis through a retirement annuity product offered by Fidelity Investments Life Insurance Co. The Company contributions are made in December of each year and the named executive officer must be employed at the time the contribution is made to be eligible. Under this program, in 2018 the Company contributed to the annuity an amount equal to 11% of each of Mr. McNally's and Mr. Jenkins' annual incentive award (the other named executive officers were not eligible due to either the timing of their promotions or due to their not being employed on the contribution date). The after-tax annuity program contains no vesting requirements.

The Company has no defined benefit retirement plan, supplemental executive retirement plan (SERP) or deferred compensation obligations to any employee.

Perquisites

Consistent with its philosophy of pay for performance, the Company generally aims to provide modest perquisites to its named executive officers that, in number and value, are below median competitive levels for the industry.

Perquisites offered to each named executive officer include the following: a car allowance, a country club and a dining club membership, executive physical and healthcare services (for the executive and his/her spouse), financial planning, life insurance and accidental death and disability insurance (both of which exceed the level of insurance provided to other employees), and, except for Messrs. McNally and Lushko, a reduced monthly lease rate for parking. The named executive officers may use two tickets purchased by EQT to attend up to four sporting or other events when such tickets are not otherwise being used for business purposes. The costs of such tickets used for personal purposes are considered de minimis by EQT and are not included as perquisites in the Summary Compensation Table because there are no incremental costs to EQT associated with such use. Beginning in 2019, Mr. McNally is a beneficiary of, and during 2018 Messrs. Schlotterbeck, Schlosser and Ashcroft were beneficiaries of, a travel security insurance policy.

In connection with Mr. Porges assuming the role of interim President and Chief Executive Officer upon the unanticipated, voluntary departure of Mr. Schlotterbeck in March 2018, the Committee determined to permit Mr. Porges to utilize corporate-chartered aircraft to facilitate travel between the Company's headquarters and Mr. Porges' home in Florida. The Committee believed that making this perquisite available to Mr. Porges was appropriate to secure his experience and engaged leadership in the role of interim President and Chief Executive Officer through the critical period of completion of the Spin-off. For his services as interim President and Chief Executive Officer, Mr. Porges remained an employee of the Company eligible for continued participation and vesting in its benefit plans and long-term incentive plans and for named executive officer perquisites, plus a base salary. Mr. Porges did not receive any special cash bonus or equity award, did not receive an annual incentive award payout under the Executive STIP, and did not receive any equity awards under the Long-Term Incentive Plan for 2018.

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See footnote (6) to the Summary Compensation Table below for a discussion of the perquisites provided to the named executive officers in 2018.

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, the Company provides such protections for the named executive officers under their Confidentiality, Non-Solicitation and Non-Competition Agreements, which are described in detail under the caption "Potential Payments Upon Termination or Change of Control" below.

Importantly, these executive agreements include covenants not to compete with, or solicit employees, customers, potential customers, vendors or independent contractors from, 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.

In connection with their promotion or hiring, the Committee:

    made no changes to the Confidentiality, Non-Solicitation and Non-Competition Agreements for Messrs. McNally and Jenkins; and

    approved the standard executive officer Confidentiality, Non-Solicitation and Non-Competition Agreements for Mses. Smith and Centofanti and Mr. Lushko.

In March 2018, Mr. Schlotterbeck resigned as President and Chief Executive Officer of the Company and Mr. Porges became interim President and Chief Executive Officer, in addition to his role as Chairman of the Board. Before he resigned, the Committee offered Mr. Schlotterbeck a compensation package consisting of a $900,000 salary, $1,008,000 annual