PROPOSAL ONE
ELECTION OF DIRECTORS
The
Board of Directors has nominated the following individuals for election as Class III Directors of the Company to serve for a three-year term to expire at the 2025 annual meeting of stockholders:
Waters S. Davis, IV
Rene R. Joyce
Matthew J. Meloy
Messrs.
Davis, Joyce and Meloy are currently serving as directors of the Company. Their biographical information is contained in the Directors and Executive Officers section below.
The Board currently consists of twelve directors. As part of our ongoing Board succession planning, Director Chris Tong will not stand for
reelection and announced his retirement from the Board effective as of the date of the Annual Meeting. Mr. Tongs decision not to stand for reelection was not the result of any disagreement with the Company or any of its affiliates on any
matter relating to the Companys operations, policies or practices. Our bylaws provide that the number of directors will be determined by the Board of Directors, and the number of directors is currently set at twelve. We will reduce the number
of directors to eleven following the Annual Meeting.
The Board of Directors has no reason to believe that any of its nominees will be
unable or unwilling to serve if elected. If a nominee becomes unable or unwilling to accept nomination or election, either the number of the Companys directors will be reduced or the persons acting via proxy will vote for the election of a
substitute nominee that the Board of Directors recommends.
Our bylaws provide that in an uncontested election, each director will be
elected by the affirmative vote of a majority of the votes cast with respect to that directors election (meaning that the number of votes cast for a directors election must exceed the number of votes cast against
that directors election). Pursuant to our bylaws, each incumbent director nominated for election must submit an irrevocable resignation, contingent on (i) not receiving a majority of the votes cast in an uncontested election, and
(ii) acceptance of that proffered resignation by the Board of Directors in accordance with the following policies and procedures. In the event an incumbent director fails to receive a majority of the votes cast in an uncontested election, the
Nominating and Governance Committee will make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors will act on the
proffered resignation, taking into account such committees recommendation, and publicly disclose its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within ninety days following
certification of the election results. Such committee, in making its recommendation, and the Board of Directors, in making its decision, each may consider any factors and other information that they consider appropriate and relevant. The director
whose resignation is being considered will not participate in the deliberations of such committee or the Board of Directors with respect to whether to accept such directors resignation. If the directors resignation is not accepted by the
Board of Directors, such director will continue to serve until his or her successor is duly elected, or until his or her earlier resignation or removal.
Vote Required
The affirmative vote of a
majority of the votes cast with respect to each directors election is required to elect that director (meaning that the number of votes cast for a directors election must exceed the number of votes cast against
that directors election). If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on
this proposal. Please see Quorum and VotingVote Required for further information regarding the impact of abstentions and broker non-votes.
Recommendation of our Board of Directors
The Board of Directors unanimously recommends that stockholders vote FOR the election of each of the nominees.
7
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of the Company and the executive officers of the Company are:
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Name
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Age (1) |
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Position
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Matthew J. Meloy |
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44 |
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Chief Executive Officer and Director |
Patrick J. McDonie |
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61 |
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President Gathering and Processing |
D. Scott Pryor |
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59 |
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President Logistics and Transportation |
Robert M. Muraro |
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45 |
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Chief Commercial Officer |
Jennifer R. Kneale |
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43 |
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Chief Financial Officer |
Regina L. Gregory |
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51 |
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Executive Vice President, General Counsel and Secretary |
G. Clark White |
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62 |
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Executive Vice President - Operations |
Julie H. Boushka |
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59 |
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Senior Vice President and Chief Accounting Officer |
Paul W. Chung |
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62 |
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Chairman of the Board of Directors |
Joe Bob Perkins |
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61 |
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Director |
Rene R. Joyce |
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74 |
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Director |
Charles R. Crisp |
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74 |
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Director |
Chris Tong (2) |
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65 |
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Director |
Ershel C. Redd Jr. |
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74 |
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Director |
Laura C. Fulton |
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58 |
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Director |
Waters S. Davis, IV |
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68 |
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Director |
Robert B. Evans |
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73 |
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Director |
Beth A. Bowman |
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65 |
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Director |
Lindsey M. Cooksen |
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39 |
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Director |
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(1) |
Ages as of April 1, 2022. |
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(2) |
Mr. Tong will not be standing for reelection and is retiring from the Board, effective as of the date of
the Annual Meeting, and therefore will no longer be considered a member of the Board as of the date of the Annual Meeting. |
Matthew
J. Meloy has served as Chief Executive Officer and a director of the Company and Targa Resources GP LLC (the General Partner) of Targa Resources Partners LP (the Partnership or TRP) since March 1, 2020.
Mr. Meloy previously served as President of the Company and the General Partner between March 2018 and March 2020. Mr. Meloy also served as Executive Vice President and Chief Financial Officer of the Company and the General Partner
between May 2015 and February 2018. He also served as Treasurer of the Company and the General Partner until December 2015. Mr. Meloy previously served as Senior Vice President, Chief Financial Officer and Treasurer of the Company between
October 2010 and May 2015 and of the General Partner between December 2010 and May 2015. He also served as Vice PresidentFinance and Treasurer of the Company between April 2008 and October 2010, and as Director, Corporate Development of the
Company between March 2006 and March 2008 and of the General Partner between March 2006 and March 2008. He served as Vice PresidentFinance and Treasurer of the General Partner between April 2008 and December 15, 2010. Mr. Meloy was
with The Royal Bank of Scotland in the structured finance group, focusing on the energy sector from October 2003 to March 2006. Mr. Meloys extensive knowledge of the Companys operational and strategic initiatives and capital
investment program, attained from his service as President for two years and Chief Financial Officer for eight years, combined with his experience in the finance industry, brings operational, financial and capital markets experience to the Board.
Patrick J. McDonie has served as PresidentGathering and Processing of the Company and the General Partner since March 2018.
Mr. McDonie previously served as Executive Vice PresidentSouthern Field Gathering and Processing of the Company and the General Partner between November 2015 and February 2018. He also served as President of Atlas Pipeline
Partners GP LLC (Atlas), which was acquired by the Partnership in February 2015, between October 2013 and February 2015. He also served as Chief Operating Officer of Atlas between July 2012 and October 2013 and as Senior Vice
President of Atlas between July 2012 and October 2013. He served as President of ONEOK Energy Services Company, a natural gas transportation, storage, supplier and marketing company between May 2008 and July 2012.
8
D. Scott Pryor has served as PresidentLogistics and Transportation of the Company and the
General Partner, since March 2018. Mr. Pryor previously served as Executive Vice PresidentLogistics and Marketing of the Company and the General Partner between November 2015 and February 2018. He also served as Senior Vice
PresidentNGL Logistics & Marketing of Targa Resources Operating LLC (Targa Operating) and various other subsidiaries of the Partnership between June 2014 and November 2015. He also served as Vice President of Targa
Operating between July 2011 and May 2014 and has held officer positions with other Partnership subsidiaries since 2005.
Robert M. Muraro has
served as Chief Commercial Officer of the Company and the General Partner since March 2018. Mr. Muraro previously served as Executive Vice PresidentCommercial of the Company and the General Partner between February 2017 and
February 2018. He also served as Senior Vice PresidentCommercial and Business Development of Targa Midstream Services LLC (Targa Midstream) and various other subsidiaries of the Partnership between March 2016 and February
2017. He also served as Vice PresidentCommercial Development of Targa Midstream and various other subsidiaries of the Partnership between January 2013 and March 2016. He held the position of Director of Business Development between August 2004
and January 2013.
Jennifer R. Kneale has served as Chief Financial Officer of the Company and the General Partner since March 2018.
Ms. Kneale previously served as Vice PresidentFinance of the Company and the General Partner between December 2015 and February 2018. She also served as Senior Director, Finance of the Company and the General Partner between
March 2015 and December 2015. She also served as Director, Finance of the Company and the General Partner between May 2013 and February 2015. Ms. Kneale was with Tudor, Pickering, Holt & Co. in its energy private equity group, TPH
Partners, from September 2011 to May 2013.
Regina L. Gregory has served as Executive Vice President, General Counsel and Secretary of the Company
and the General Partner since March 1, 2020. Ms. Gregory previously served as Vice President and Assistant General Counsel of the Company and the General Partner between May 2019 and March 2020 and of certain of the Companys
subsidiaries between April 2019 and March 2020. From June 2017 until joining the Company in July 2018, she was Senior Vice President, General Counsel and Corporate Secretary of Frontier Midstream Services IV LLC. She also served as Senior Vice
President, General Counsel and Corporate Secretary for the general partner of American Midstream Partners, LP during 2016 and 2017. Prior to that, she was General Counsel, Vice President, and Corporate Secretary of Traverse Midstream Partners, LP in
2015 and 2016 and the general partner of Access Midstream Partners LP (previously Chesapeake Midstream Partners LP) from 2010 through 2015. Additionally, Ms. Gregory held a number of legal positions with different companies, including the law
firms of Jones Day and Fulbright & Jaworski (now Norton Rose Fulbright).
G. Clark White has served as Executive Vice
PresidentOperations of the Company and the General Partner since September 2020 and served as Executive Vice PresidentEngineering and Operations of the Company and the General Partner between November 2015 and September 2020.
Mr. White previously served as Senior Vice PresidentField G&P of Targa Operating and various other subsidiaries of the Partnership between June 2014 and November 2015. He also served as Vice President of Targa Operating between July
2011 and May 2014 and has held officer positions with other Partnership subsidiaries since 2003.
Julie H. Boushka has served as Senior Vice
President and Chief Accounting Officer of the Company and the General Partner since March 2019. Ms. Boushka previously served as Vice PresidentController of the Company, the General Partner and various subsidiaries of the Company
between February 2017 and February 2019. She also served as Assistant ControllerFinancial Accounting of the Company and the General Partner between November 2016 and February 2017. Ms. Boushka served as a Senior Vice President for
Financial Planning and the Chief Risk Officer for Columbia Pipeline Group (CPG) between June 2015 and August 2016, where she was responsible for the financial planning function and managing enterprise risk. She also served as the
Business Unit Chief Financial Officer of CPG between May 2013 and June 2015, where she was responsible for the accounting and financial planning functions. Prior to that, Ms. Boushka spent approximately 18 years in various roles at El Paso
Corporation (and its predecessor, Tenneco, Inc.), including accounting, financial reporting and business development.
Paul W. Chung has served as
a director and Chairman of the Board of the Company and the General Partner since January 1, 2021. From March 2020 until December 31, 2020, he served as Executive Vice President and Senior Legal
9
Advisor of the Company. From May 2004 to March 2020, Mr. Chung served as Executive Vice President, General Counsel and Secretary of the Company and its predecessor entities and of the General
Partner since its formation. From 1999 to May 2004, he served as Executive Vice President and General Counsel of various Shell Oil Company (Shell) affiliates, including Coral Energy, LLC and Shell Trading North America Company. In these
positions, Mr. Chung was responsible for all legal and regulatory affairs. From 1996 to 1999, he served as Vice President and Assistant General Counsel of Tejas Gas Corporation (Tejas). Prior to 1996, Mr. Chung held a number of legal
positions with different companies, including the law firm of Vinson & Elkins L.L.P. Mr. Chungs knowledge of the Company, together with his background in the energy industry and his legal and regulatory experience, enable Mr. Chung to
provide a valuable and distinct perspective to the Board on a range of business and management matters.
Joe Bob Perkins has served as a director
of the Company and the General Partner since January 2012. Mr. Perkins previously served as Executive Chairman of the Board of the Company and the General Partner between March 1, 2020 and December 31, 2020 and as Chief Executive Officer of the
Company and the General Partner between January 2012 and March 2020. He also served as President of the Company between the date of its formation on October 2005 and December 2011. Prior to 2005, Mr. Perkins served predecessor Targa companies as
President since their founding in 2003. Prior to that, Mr. Perkins served in various leadership roles within the energy industry across several different companies, had employment experience with companies operating in both the midstream and
upstream sectors, and was a management consultant with McKinsey & Company working primarily in energy. Mr. Perkins intimate knowledge of all facets of the Company, derived from his past services as Executive Chairman of the Board and as
President and Chief Executive Officer, coupled with his broad experience in the energy industry, and specifically in the midstream sector, his engineering and business educational background, his experience with the investment community, and
experiences on other boards enable Mr. Perkins to provide a valuable and unique perspective to the Board on a range of business and management matters.
Rene R. Joyce has served as a director of the Company since its formation in October 2005 and of the General Partner since October 2006.
Mr. Joyce previously served as Executive Chairman of the Board of the Company and the General Partner between January 2012 and December 2014. He also served as Chief Executive Officer of the Company between October 2005 and
December 2011 and the General Partner between October 2006 and December 2011. He also served as an officer and director of an affiliate of the Company during 2004 and 2005 and was a consultant for the affiliate during 2003. Mr. Joyce
served as a director of Apache Corporation between May 2017 and May 2021. Mr. Joyce served as a consultant in the energy industry from 2000 through 2003 providing advice to various energy companies and investors regarding their operations,
acquisitions and dispositions. Mr. Joyce served as President of onshore pipeline operations of Coral Energy, LLC, a subsidiary of Shell from 1998 through 1999 and President of energy services of Coral, a subsidiary of Shell which was the gas
and power marketing joint venture between Shell and Tejas, during 1999. Mr. Joyce served as President of various operating subsidiaries of Tejas, a natural gas pipeline company, from 1990 until 1998 when Tejas was acquired by Shell. As the
founding Chief Executive Officer of the Company, Mr. Joyce brings deep experience in the midstream business, expansive knowledge of the oil and gas industry, as well as relationships with chief executives and other senior management at peer
companies, customers and other oil and natural gas companies throughout the world. His experience and industry knowledge, complemented by an engineering and legal educational background, enable Mr. Joyce to provide the Board with executive
counsel on the full range of business, technical, and professional matters.
Charles R. Crisp has served as a director of the Company since its
formation in October 2005 and of the General Partner since March 2016. He also served as a director of an affiliate of the Company during 2004 and 2005. Mr. Crisp was President and Chief Executive Officer of Coral Energy, LLC, a
subsidiary of Shell from 1999 until his retirement in November 2000, and was President and Chief Operating Officer of Coral from January 1998 through February 1999. Prior to this, Mr. Crisp served as President of the power generation group of
Houston Industries and, between 1988 and 1996, as President and Chief Operating Officer of Tejas. Mr. Crisp is also a director of Southern Company Gas (formerly known as AGL Resources Inc.), a subsidiary of The Southern Company, EOG Resources
Inc. and Intercontinental Exchange Inc. Mr. Crisp brings extensive energy experience, a vast understanding of many aspects of our industry and experience serving on the boards of other public companies in the energy industry. His leadership and
business experience and deep knowledge of various sectors of the energy industry bring a crucial insight to the Board.
Chris Tong has served as a
director of the Company since January 2006 and of the General Partner since March 2016. Mr. Tong served as a director of Kosmos Energy Ltd. from 2011 until September 2019. He served as Senior Vice President
10
and Chief Financial Officer of Noble Energy, Inc. from January 2005 until August 2009. He also served as Senior Vice President and Chief Financial Officer for Magnum Hunter Resources, Inc. from
August 1997 until December 2004. Prior thereto, he was Senior Vice President of Finance of Tejas Acadian Holding Company and its subsidiaries, including Tejas Gas Corp., Acadian Gas Corporation and Transok, Inc., all of which were wholly-owned
subsidiaries of Tejas. Mr. Tong held these positions from August 1996 until August 1997, and had served in other treasury positions with Tejas since August 1989. Mr. Tong brings a breadth and depth of experience as a chief financial
officer in the energy industry, a financial executive, a director of other public companies and a member of other audit committees. He brings significant financial, capital markets and energy industry experience to the Board.
Ershel C. Redd Jr. has served as a director of the Company since February 2011 and of the General Partner since March 2016. Mr. Redd has
served as a consultant in the energy industry since 2008 providing advice to various energy companies and investors regarding their operations, acquisitions and dispositions. Mr. Redd was President and Chief Executive Officer of El Paso
Electric Company, a public utility company, from May 2007 until March 2008. Prior to this, Mr. Redd served in various positions with NRG Energy, Inc., a wholesale energy company, including as Executive Vice PresidentCommercial Operations
from October 2002 through July 2006, as PresidentWestern Region from February 2004 through July 2006, and as a director between May 2003 and December 2003. Mr. Redd served as Vice President of Business Development for Xcel Energy Markets,
a unit of Xcel Energy Inc., from 2000 through 2002, and as President and Chief Operating Officer for New Century Energys (predecessor to Xcel Energy Inc.) subsidiary, Texas Ohio Gas Company, from 1997 through 2000. Mr. Redd brings to the
Company extensive energy industry experience, a vast understanding of varied aspects of the energy industry and experience in corporate performance, marketing and trading of natural gas and natural gas liquids, risk management, finance, acquisitions
and divestitures, business development, regulatory relations and strategic planning. His leadership and business experience and deep knowledge of various sectors of the energy industry bring a crucial insight to the Board.
Laura C. Fulton has served as a director of the Company since February 2013 and of the General Partner since March 2016. Ms. Fulton has
served as the Senior Vice President and Chief Financial Officer of the American Bureau of Shipping since July 2021 and previously served as the Vice President of Finance from January 2020 until July 2021. Ms. Fulton served as the
Chief Financial Officer of Hi-Crush Proppants LLC from April 2012 until December 2019 and Hi-Crush GP LLC, the general partner of
Hi-Crush Partners LP, from May 2012 until May 2019 and its successor, Hi-Crush Inc., from May 2019 to December 2019. On July 12, 2020, Hi-Crush Inc. and each of its direct and indirect wholly-owned domestic subsidiaries (including Hi-Crush Proppants LLC) (collectively, Hi-Crush) filed for
protection under Chapter 11 of the Federal Bankruptcy Code. On October 9, 2020, Hi-Crushs Chapter 11 Plan of Reorganization was confirmed. From March 2008 to October 2011, Ms. Fulton served as Executive Vice President, Accounting and then
Executive Vice President, Chief Financial Officer of AEI Services, LLC (AEI), an owner and operator of essential energy infrastructure assets in emerging markets. Prior to AEI, Ms. Fulton spent 12 years with Lyondell Chemical Company in
various capacities, including as general auditor responsible for internal audit and the Sarbanes-Oxley certification process, and as the assistant controller. Prior to that, she spent 11 years with Deloitte & Touche in public accounting, with a
focus on audit and assurance. As a chief financial officer, general auditor and external auditor, Ms. Fulton brings to the company extensive financial, accounting and compliance process experience. Ms. Fultons experience as a financial
executive in the energy industry, including her positions with a publicly-traded company and master limited partnership, also brings industry and capital markets experience to the Board.
Waters S. Davis, IV has served as director of the Company since July 2015 and of the General Partner since March 2016. Mr. Davis previously
served as President of National Christian Foundation, Houston from July 2014 until December 2020. Mr. Davis was Executive Vice President of NuDevco LLC (NuDevco) from December 2009 to December 2013. Prior to his employment with
NuDevco, he served as President of Reliant Energy Retail Services from June 1999 to January 2002 and as Executive Vice President of Spark Energy from April 2007 to November 2009. He previously served as a senior executive at a number of private
companies and as an advisor to a private equity firm, providing operational and strategic guidance. Mr. Davis also serves as a director of Milacron Holdings Corp. Mr. Davis brings expertise in the retail energy, midstream and services
industries, which enhances his contributions to the Board.
Robert B. Evans has served as a director of the Company since March 2016 and of
the General Partner since February 2007. Mr. Evans is also a director of New Jersey Resources Corporation and One Gas, Inc. Mr. Evans was a director of Sprague
11
Resources GP LLC until October 2018. Mr. Evans was the President and Chief Executive Officer of Duke Energy Americas, a business unit of Duke Energy Corp., from January 2004 until his
retirement in March 2006. Mr. Evans served as the transition executive for Energy Services, a business unit of Duke Energy, during 2003. Mr. Evans also served as President of Duke Energy Gas Transmission beginning in 1998 and was named
President and Chief Executive Officer in 2002. Prior to his employment at Duke Energy, Mr. Evans served as Vice President of marketing and regulatory affairs for Texas Eastern Transmission and Algonquin Gas Transmission from 1996 to 1998.
Mr. Evans extensive experience in the gas transmission and energy services sectors enhances the knowledge of the Board in these areas of the oil and gas industry. As a former President and CEO of various operating companies, his breadth
of executive experiences is applicable to many of the matters routinely facing the Partnership.
Beth A. Bowman has served as a director of the
Company and the General Partner since September 2018. Ms. Bowman has served as a director of Sprague Resources GP LLC, the general partner of Sprague Resources LP (Sprague), since October 2014, and she currently serves on the
Audit Committee of Sprague. Ms. Bowman held management positions at Shell Energy North America (US) L.P. (Shell Energy) for 17 years until her retirement in September 2015. While at Shell Energy, she held the roles of Senior Vice
President of the West and Mexico and later as the Senior Vice President of Sales and Origination for Shells North America business. Prior to joining Shell Energy, Ms. Bowman held management positions at Sempra Energy Trading and
Sempras San Diego Gas & Electric utility in various areas including trading and marketing, risk management, fuel and power supply, regulatory, finance and engineering. Ms. Bowman also served on the board of the California Power
Exchange and the board of the California Foundation of Energy and Environment from 2004 until 2015. Ms. Bowmans extensive energy industry background, including her experience in origination, commodities markets and risk management
enhances the knowledge of the Board in these areas of the oil and gas industry.
Lindsey M. Cooksen has served as a director of the Company and the
General Partner since June 1, 2020. Ms. Cooksen has served as the founder and managing director of Cooksen Wealth, LLC, a wealth management firm, since April 2019. She previously held various positions with Morgan Stanley Private Wealth
Management (Morgan Stanley) from August 2009 to April 2019. While at Morgan Stanley she held the roles of Private Wealth Advisor, Family Wealth Director and Portfolio Management Director. She also previously worked for Citigroup Global
Investment Bank between July 2005 and August 2007. Ms. Cooksens extensive corporate experience in the financial services industry, including wealth management and portfolio construction, tax planning and analysis and risk mitigation
brings financial experience and an investors perspective to the Board.
12
Summary of Director Qualifications and Experience
This table provides a summary view of the qualifications and attributes of each director and director nominee.
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Directors |
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Knowledge, Skills, Experience
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Accounting |
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Business Operations |
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Capital Management |
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Corporate Governance Leadership |
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Executive Experience |
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Financial Expertise |
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HR / Compensation |
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Independence |
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Industry Experience |
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Legal / Regulatory |
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Mergers & Acquisitions |
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Public Company Board Experience |
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Risk Management |
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Strategic Planning / Oversight |
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Demographic Background
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Targa Board Tenure (Years)1 |
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3 |
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1 |
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2 |
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11 |
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6 |
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8 |
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11 |
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2 |
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9 |
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10 |
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11 |
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Gender (Male / Female) |
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F |
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M |
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F |
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M |
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M |
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M |
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F |
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M |
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M |
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M |
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M |
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M |
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Race / Ethnicity
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Asian / Pacific Islander |
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Black |
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Caucasian / White |
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Hispanic / Latino |
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Native American |
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(1) |
As of the date of the Annual Meeting. Tenure calculated from the closing date of the Targa initial public
offering. |
13
MEETINGS AND COMMITTEES OF DIRECTORS
Board of Directors
Our Board of
Directors currently consists of twelve members. The Board of Directors reviewed the independence of our directors using the independence standards of the New York Stock Exchange (NYSE) and various other factors discussed under
Director Independence and, based on this review, determined that Mses. Bowman, Cooksen and Fulton and Messrs. Crisp, Davis, Evans, Joyce, Redd and Tong are independent within the meaning of the NYSE listing standards currently in effect.
Mr. Tong will not be standing for reelection and is retiring from the Board, effective as of the date of the Annual Meeting, and therefore will no longer be considered an independent director or a member of the Board. The Board held eight
meetings during 2021. In addition, the independent members of the Board of Directors meet in executive session without the presence of the CEO or other members of management at least once annually. During 2021, each of the directors that served on
the Board of Directors during the year attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings of all committees of the Board on which that director served.
Our directors are divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will
serve until our annual meetings of stockholders in 2023, 2024 and 2022, respectively. The Class I directors are Messrs. Chung and Crisp and Ms. Fulton, the Class II directors are Messrs. Evans, Redd and Perkins and Mses. Bowman and
Cooksen and the Class III directors are Messrs. Davis, Joyce, Meloy and Tong (who is retiring from the Board and will not be standing for reelection). At each annual meeting of stockholders, directors will be elected to succeed the class of
directors whose terms have expired. This classification of our Board of Directors could have the effect of increasing the length of time necessary to change the composition of a majority of the Board of Directors. In general, at least two annual
meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the Board of Directors.
Committees of
the Board of Directors
Our Board of Directors has a standing Audit Committee, Compensation Committee, Nominating and Governance
Committee, Risk Management Committee and Sustainability Committee, and may have such other committees as the Board of Directors shall determine from time to time. Each of the standing committees of the Board of Directors has the composition and
responsibilities described below.
Audit Committee
The members of our Audit Committee are Mses. Cooksen and Fulton and Mr. Evans. Ms. Fulton is the Chairman of this committee. Our
Board of Directors has affirmatively determined that each of the members of the Audit Committee is independent as described in the rules of the NYSE and the Securities Exchange Act of 1934, as amended (the Exchange Act). Our Board of
Directors has also determined that, based upon relevant experience, Ms. Fulton is an audit committee financial expert as defined in Item 407 of Regulation S-K.
This committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board of Directors, including: the
selection of our independent auditors, the scope of our annual audits, fees to be paid to the independent auditors, the performance of our independent auditors and our accounting practices. In addition, the Audit Committee oversees our compliance
programs relating to legal and regulatory requirements and our cybersecurity efforts and measures. We have adopted an Audit Committee charter defining the committees primary duties in a manner consistent with the rules of the SEC and NYSE that
is posted on the Companys website at www.targaresources.com/investors/corporate-governance. The Audit Committee held four meetings during 2021.
Compensation Committee
The
members of our Compensation Committee are Messrs. Crisp, Davis and Evans and Ms. Bowman. Mr. Davis is the Chairman of this committee. This committee establishes salaries, incentives and other forms of compensation for officers, directors
and other employees. Our Compensation Committee also administers our incentive compensation and benefit plans. We have adopted a Compensation Committee charter defining the committees primary duties in a manner consistent with the rules of the
SEC and NYSE that is posted on the Companys website at www.targaresources.com/investors/corporate-
14
governance. The Compensation Committee held five meetings during 2021. Our Board of Directors has determined that each of the members of the Compensation Committee is (i) independent under
the NYSEs rules governing Compensation Committee membership; and (ii) a non-employee director under Rule 16b-3 of the Exchange Act.
The Compensation Committee has the authority to retain, compensate, direct, oversee and terminate outside counsel, compensation consultants
and other advisors hired to assist the Compensation Committee. In July 2021, the Compensation Committee retained Meridian Compensation Partners, LLC (the Compensation Consultant or Meridian) as its independent compensation
consultant for matters related to executive and non-management director compensation. The Compensation Consultant reports to the Compensation Committee and does not provide any additional services to us.
In July 2021, the Compensation Committee considered the independence of Meridian in light of SEC rules and the NYSE listing standards. The
Compensation Committee requested and received a letter from Meridian addressing the consulting firms independence, including the following factors:
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Other services provided to us by Meridian; |
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Fees paid by us as a percentage of Meridians total revenue; |
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Policies or procedures maintained by Meridian that are designed to prevent a conflict of interest;
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Any business or personal relationships between the individual consultants involved in the engagement and members
of the Compensation Committee; |
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Any stock of the Company owned by the individual consultants involved in the engagement; and
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Any business or personal relationships between our executive officers and Meridian or the individual consultants
involved in the engagement. |
The Compensation Committee discussed these considerations and concluded that the work of
Meridian did not raise any conflict of interest.
Nominating and Governance Committee
The members of our Nominating and Governance Committee are Messrs. Crisp, Davis and Tong and Ms. Fulton. Mr. Crisp is the Chairman
of this committee. This committee identifies, evaluates and recommends qualified nominees to serve on our Board of Directors, develops and oversees our internal corporate governance processes and maintains a management succession plan. We have
adopted a Nominating and Governance Committee charter defining the committees primary duties in a manner consistent with the rules of the SEC and NYSE that is posted on the Companys website at
www.targaresources.com/investors/corporate-governance. The Nominating and Governance Committee held three meetings during 2021. Our Board of Directors has determined that each of the members of the Nominating and Governance Committee is independent
under the NYSEs rules governing board membership.
In evaluating director candidates, the Nominating and Governance Committee
assesses whether a candidate possesses the integrity, judgment, knowledge, experience, skills and expertise that are likely to enhance the Boards ability to manage and direct the affairs and business of the Company, including, when applicable,
to enhance the ability of committees of the Board to fulfill their duties.
Risk Management Committee
The members of our Risk Management Committee are Messrs. Joyce, Perkins and Tong and Ms. Bowman. Ms. Bowman is the Chairman of this
committee. This committee oversees our commodity price and commodity basis risk management and hedging activity.
The primary purpose of
our commodity risk management activities is to hedge our exposure to price risk and to mitigate the impact of fluctuations in commodity prices on cash flow.
15
Sustainability Committee
The members of our Sustainability Committee are Messrs. Chung, Crisp and Joyce and Ms. Cooksen. Mr. Chung is the Chairman of this
committee. This committee oversees the Companys material sustainability matters.
The primary purpose of our Sustainability
Committee is to assist the Board in overseeing our compliance with all laws, regulations and Company policies and procedures related to material environmental, social and governance (ESG) matters, including governance in relation to such
matters, and to oversee managements process for establishing and implementing a strategy to integrate sustainability into various business activities of the Company to create long-term stockholder value.
We have adopted a Sustainability Committee charter defining the committees primary duties that is posted on the Companys website at
www.targaresources.com/investors/corporate-governance.
16
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Discussion and Analysis (CD&A) reviews
the elements and objectives of Targas executive compensation program and the decision-making process by our Compensation Committee in support of those objectives. We encourage you to read this CD&A in combination with the compensation
tables that follow for context regarding the Committees 2021 decisions on compensation for our Named Executive Officers (NEOs), as listed below.
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2021 Named Executive Officers |
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Matthew J. Meloy |
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Chief Executive Officer (CEO) |
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Jennifer R. Kneale |
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Chief Financial Officer (CFO) |
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Patrick J. McDonie |
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President Gathering and Processing |
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D. Scott Pryor |
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President Logistics and Transportation |
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Robert M. Muraro |
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Chief Commercial Officer |
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EXECUTIVE SUMMARY
2021 Business Environment
In 2021, the Targa team performed exceptionally well in the face of the evolving COVID-19 pandemic, continuing
to deliver services for our customers, safely and reliably. Our employees across all areas of our operations remained attentive with our adopted additional safety measures and their efforts resulted in the continued safety of our employees and
minimal business disruptions. The development, distribution, and administration of various COVID-19 vaccines during the year helped advance a global reopening and support a strengthening business environment
as we advanced throughout the year. Improving demand fundamentals drove an improvement in commodity markets and a steady increase in producer activity. While there continues to be uncertainty about the disruptions and other effects related to COVID-19, our business and operations remain well positioned for the longer term. Our Board of Directors receives regular updates around preserving the well-being of our employees and continuity of Targa business
operations as COVID-19 evolves.
2021 Performance Highlights
Our overall business performed well in 2021, led by our leadership position in the Permian Basin and our integrated NGL platform. Our full year average Permian natural
gas inlet volumes increased 12% when compared to 2020. Improving business fundamentals drove record volumes through our Permian G&P systems and through our Logistics and Transportation systems, demonstrating the strength of our integrated
position.
Our full year net income (loss) for 2021 was $71.2 million compared to ($1.5) billion for 2020. We achieved record full year Adjusted EBITDA of
$2.052 billion in 2021, a 25% increase over 2020 and we generated $1.1 billion of free cash flow in the year. In 2021, we prioritized available free cash flow towards debt reduction and strengthening our leverage metrics. We reduced our
debt by $1.15 billion and we exited 2021 with meaningfully lower leverage when compared to 2020. See Appendix A for a discussion of Adjusted EBITDA and free cash flow, and reconciliations of such measures to their most directly
comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP).
In 2021, we safely
completed and placed into service our new Heim plant in Permian Midland ahead of schedule and under budget. Supported by the strength of our performance in 2021 and robust outlook, our Board of Directors approved an increase to our common dividend
to $1.40 per common share annualized for the fourth quarter 2021. We believe that with our best in class Permian wellhead to water NGL business, complemented by our strong balance sheet, we are well positioned to continue to identify attractive,
high returning growth opportunities that leverage our integrated system, which supports our successful outlook for 2022 and beyond.
17
Shareholder Outreach
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We
regularly meet with our shareholders to discuss business topics, seek feedback on our performance, and address other matters such as executive compensation and ESG matters. |
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2020 Outreach |
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2021 Outreach |
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These discussions typically include some combination of our
CFO, General Counsel, SVP of Sustainability and Environmental, Safety and Health (ES&H) and VP, Finance and Investor Relations. |
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71% of outstanding shares |
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62%
of outstanding shares |
During 2020 and 2021 we maintained the focus of our
stockholder engagement on executive compensation matters in response to say-on-pay vote support of approximately 66% in 2020. Our say-on-pay vote support increased substantially to approximately 98% in 2021. |
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24 meetings conducted |
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14
meetings conducted |
With a desire to broaden our perspective and improve our communications related to
executive compensation, governance, sustainability and related matters, we will continue to engage in annual outreach on those topics with our largest shareholders. |
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During our 2021 outreach, our shareholders generally expressed support for the design and administration of our current programs. In
response to feedback from some of our investors, we did add a per-share metric to our 2021 annual incentive program.
Our
Compensation Committee will continue to consider improvements to our programs in light of shareholder feedback, changing industry conditions, and evolving best practices.
2021 EXECUTIVE COMPENSATION PROGRAM
SNAPSHOT
Compensation Philosophy and Guiding Principles
The philosophy underlying our executive compensation program is to employ the best leaders in our industry to ensure we execute on our business goals, promote both short-and long-term profitable growth of the Company and create long-term shareholder value. As such, our program is grounded in the following principles:
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Competitiveness. Our executive compensation program should enable us to attract and retain key executives by
providing a total compensation program that is competitive with the market where we compete for executive talent, which encompasses not only diversified midstream companies but also other companies in the energy industry. |
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Performance Accountability. Our executive compensation program should ensure an alignment between our strategic,
operational and financial performance and the total compensation received by our NEOs. This includes providing compensation for performance that reflects individual and company performance both in absolute terms and relative to our Peer Group.
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Shareholder Alignment. Our executive compensation program should ensure a balance between short-term and long-term
compensation while emphasizing at-risk or variable compensation. Performance-based compensation acts as a valuable means of supporting our strategic goals and business objectives and aligning the interests of
our NEOs with those of our shareholders. |
18
Good Governance Foundation
The following practices and policies in our executive compensation program promote sound compensation governance and align the interests of our shareholders and
executives:
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What We Do |
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What We Dont Do |
✓ Provide majority of NEO compensation in the form of performance-based, at-risk, long-term compensation
✓ Use a combination of absolute and relative
performance metrics in incentive plans
✓ Maintain a comprehensive clawback policy aligned
with industry norms ✓ Complete an annual
compensation risk assessment ✓ Maintain
executive and director share ownership guidelines
✓ Retain an independent consultant to advise the
Committee |
|
× No employment contracts
× No single-trigger
change-in-control severance arrangements
× No single-trigger
change-in-control vesting for NEO equity awards
× No excise tax gross-ups
× No perquisites or supplemental benefits not generally available to other employees
× No hedging or pledging of Company stock
× No executive compensation practices that promote excessive risk |
Elements of Pay
The following principle pay elements support the grounding principles of our program:
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Element |
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Key Characteristics |
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Guiding Principles
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Base
Salary |
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Annual
fixed cash compensation Critical factor in attracting and retaining qualified talent |
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✓ |
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Annual
Incentives |
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Annual
variable cash award Tied to achievement of key financial, operational, and strategic
objectives |
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✓ |
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✓ |
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✓ |
Long-
Term Incentives |
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Equity-based awards vesting over multiple years:
50% Performance share units (PSUs)
50% Restricted stock units (RSUs)
Ties a majority of NEO compensation to creation of long-term value and encourages NEOs to build
meaningful equity ownership stakes |
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✓ |
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✓ |
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✓ |
Pay Mix
Emphasis on at-risk variable compensation. We remain committed to our emphasis on
at-risk, incentive-based pay with payouts tied to our performance through several strategic and financial objectives including relative TSR, and realizable pay heavily dependent upon our ability to grow
shareholder value. The charts below show the mix of total direct compensation of our CEO and our other NEOs for 2021. These charts illustrate that a majority of NEO total direct compensation is at-risk (90%
for our CEO and an average of 84% for our other NEOs).
19
CEO Pay at a Glance
Realizable pay aligned with performance. Our emphasis on at-risk, variable and performance-based pay elements,
particularly equity incentives, helps to ensure actual compensation realized by our NEOs aligns with returns to our shareholders. As shown in the charts below, CEO realizable pay over the past three and five year periods has aligned closely with our
total shareholder return performance.
Realizable compensation includes base salary, actual annual cash incentive earned, and the value of any equity incentive grants
valued based upon the period-ending stock price. For our annual comparison of realizable pay to TSR performance, the applicable stock price is the December 31st of each year. For our three-year
cumulative summary, the applicable stock price is the closing price on December 31, 2021. Any performance award granted and settled within the five-year or three-year period covered have been adjusted for actual payout percent. Awards that are
still outstanding have been valued assuming a target payout.
OUR DECISION MAKING PROGRESS
The Role of the Compensation
Committee
The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of independent, non-employee members of the Board. The Compensation Committee works very closely with its independent consultant and senior management to examine the effectiveness of the
20
Companys executive compensation program throughout the year. Details of the Compensation Committees authority and responsibilities are specified in the Compensation Committees
charter, which may be accessed at our website, www.targaresources.com, by clicking Investors, and then Corporate Governance.
The Role of Senior Management
Members of our senior management team attend regular meetings where executive compensation, Company
and individual performance, and competitive compensation levels and practices are discussed and evaluated. Our CEO reviews his recommendations pertaining to NEO pay with the Compensation Committee, providing transparency and oversight. The CEO does
not participate in the deliberations of the Compensation Committee regarding his own compensation. The members of the Compensation Committee make all final determinations regarding CEO and NEO compensation.
The Role of the Independent Consultant
The
Compensation Committee has the authority to engage and retain an independent compensation consultant to provide independent counsel and advice. At least annually, the Compensation Committee formally conducts an evaluation as to the effectiveness of
the independent compensation consultant and periodically requests proposals from other potential consulting firms to ensure the independent compensation consultant is meeting its needs. During 2021, the Compensation Committee retained the services
of Meridian Compensation Partners (Meridian) as its independent compensation consultant for matters related to executive and non-management director compensation.
The Compensation Committee assessed the independence of Meridian as required under NYSE listing rules. The Compensation Committee has also considered and assessed all
relevant factors, including but not limited to those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, that could give rise to a potential conflict of interest with respect to
Meridian. Based on this review, we are not aware of any conflicts of interest raised by the work performed by Meridian that would prevent the consultant from serving as an independent advisor to the Compensation Committee.
The Role of Market References in Setting Compensation
For purposes of setting compensation levels for 2021, the Compensation Committee worked with its independent compensation consultant to review market data from our
peers and from broader market survey sources to provide a reference and framework for decisions about the base salary and target annual and long-term incentives for each NEO. The Compensation Committee considers this information carefully and
generally desires to be competitive approximately at the market median for total compensation opportunities, although we do not formally benchmark any item of compensation to a specific level compared to our peers. Consequently, in setting pay
levels of our NEOs, the Committee considers a variety of additional factors, including individual performance, competencies, skills, potential, prior experience, scope of responsibility and accountability within the organization.
Compensation Peer Group
For purposes of
setting compensation levels for 2021, the Compensation Committee worked closely with Meridian and senior management to develop a representative peer group. The 2021 compensation peer group consisted of a mix of 18 midstream and exploration and
production companies.
21
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2021 Compensation Peer Group |
APA Corporation |
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Kinder Morgan, Inc. |
Cheniere Energy, Inc. |
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Magellan Midstream Partners, L.P. |
Crestwood Equity Partners, L.P. |
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Marathon Oil Corporation |
Devon Energy Corporation |
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NuStar Energy L.P. |
Diamondback Energy, Inc. |
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ONEOK, Inc. |
Energy Transfer Equity, L.P. |
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Ovintiv, Inc. |
Enterprise Products Partners L.P. |
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Pioneer Natural Resources Company |
EnLink Midstream Partners, L.P. |
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Plains All American Pipeline, L.P. |
Equitrans Midstream Corporation |
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Williams Companies, Inc. |
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Targa Percentile Rank vs. Peers Key Financial Measures(1) |
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Annual revenues
71st percentile |
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Total Assets
37th percentile |
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Enterprise Value
48th percentile |
1) |
As presented to the Compensation Committee in July 2021. Source: S&P Capital IQ |
The Compensation Committee reviews the composition of our peer group every year with its independent consultant in order to ensure that the companies in the group
continue to reflect an appropriate reference point for NEO compensation at Targa.
2021 EXECUTIVE COMPENSATION PROGRAM IN DETAIL
Base Salary
The Compensation Committee determined to make no changes to base salaries for the NEOs for 2021 based on its assessment of the compensation market given
the impact of COVID-19, commodity price changes and resulting industry dynamics.
The 2021 base salary rates for our NEOs
were as follows:
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NEO |
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Year End 2020 Salary |
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Year End 2021 Salary |
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Percent Change 2020 to 2021 |
Meloy |
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$ |
875,000 |
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$ |
875,000 |
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0% |
Kneale |
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575,000 |
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575,000 |
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0% |
McDonie |
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525,000 |
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525,000 |
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0% |
Pryor |
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525,000 |
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525,000 |
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0% |
Muraro |
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525,000 |
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525,000 |
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0% |
Annual Incentives
For 2021, our NEOs were eligible to receive annual incentive awards under the 2021 Annual Incentive Compensation Program which consists of cash awards under the 2010
Stock Incentive Plan (the 2021 Bonus Plan), which was approved by the Compensation Committee in March 2021.
22
Target Bonus Amounts. Target bonus opportunities are expressed as a percentage of base salary and were
established based on the NEOs level of responsibility and ability to impact overall results. The Compensation Committee also considers market data in setting target bonus amounts. The 2021 target bonus opportunities were as follows:
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NEO |
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2021 Target
Bonus
(% of Salary) |
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2021 Target Bonus
($) |
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Matthew J. Meloy |
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200% |
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$ |
1,750,000 |
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Jennifer R. Kneale |
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100% |
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575,000 |
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Patrick J. McDonie |
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100% |
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525,000 |
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D. Scott Pryor |
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100% |
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525,000 |
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Robert M. Muraro |
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100% |
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525,000 |
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2021 Bonus Plan Funding Levels. Annual bonus awards are based upon a rigorous evaluation of results across a variety of financial,
operational and strategic categories. Performance is measured against a combination of:
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Pre-established financial and operational goals; and |
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Key strategic business priorities. |
Plan funding incorporates formulaic quantitative evaluation and qualitative evaluation based on a holistic evaluation by the Compensation Committee. We believe this
balance of formulaic and qualitative evaluation is critical, reflecting the complexity of our business and our desire to ensure that decision-making over the short-term remains focused on producing sustainable growth over the long term.
23
Evaluation of 2021 Performance. Our evaluation of performance in the annual incentive program includes
consideration of performance on multiple factors within three general categories and with a safety category overlay:
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Category |
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What it includes |
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Why it is important |
Financial Performance |
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Distributable cash
flow per share Adjusted EBITDA
Balance sheet management
Reducing Debt/ EBITDA ratio
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Distributable cash flow per share, Adjusted EBITDA and balance sheet management together emphasize the
importance of profitable growth grounded in prudent fiscal management |
Operational Performance |
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Operational
Execution Volume growth
Operating cost and G&A discipline
Capital discipline
Project and commercial execution |
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Stresses the importance of operational excellence, project execution and optimization of asset utilization
through increasing volumes, while focused on effective capital discipline while managing operating and G&A costs. Commercial execution to focus on integrated and fee-based business key drivers of
value creation |
Sustainability |
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Environmental, social and governance (ESG) |
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Promotes focus on investment in human capital and on incorporating the interests of all key stakeholders in
the execution of our business strategy to help ensure that annual performance leads to sustainable long-term growth as well as continued improvement of environmental performance
|
Safety |
|
A holistic scorecard including quantitative and
qualitative evaluation of incident rates, severity, process improvement, and other safety-related items
Operates outside plan as a modifier that can reduce plan payout if performance is below expectations, but
will not be used to increase plan payouts |
|
Stresses critical nature of safe operations and reinforces philosophy that strong safety performance is an expectation and not a justification for increased incentive compensation |
24
The table below provides the more specific items within the first three general categories that our Compensation
Committee used when setting and determining the 2021 bonuses.
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Category |
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Priorities |
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Achievements |
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Score |
Financial Performance
(60%) |
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DCF/Share
Results |
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Threshold: $4.42 Target: $4.91 Max:
$5.65 Actual performance: $6.74 |
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2.50
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Adjusted EBITDA
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Threshold: $1,544 Target $1,716 Max:
$1,974 Actual performance: $2,052 |
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2.50 |
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Balance Sheet management (Debt/EBITDA ratio)
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Threshold: 4.42x Target: 4.17x Max:
3.67x Actual performance: 3.2x |
|
2.50
|
Operational Performance
(30%) |
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Volume growth |
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Threshold and maximum +/- 5% variance to 20% and 10% guidance
Actual performance: Permian +12% Actual performance: Field G&P
+4% |
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1.49
1.85 |
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Cost discipline
Capital Spending |
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Expense Threshold: $1,122MM Target: $1,020MM Max:
$918MM Actual performance: $984 million
Capital Threshold: $534MM Target: $485MM Max: $437 Actual
performance: $416 million |
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1.68 |
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Project execution |
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Threshold set at achievement of quarterly in-service dates and planned budgets May exceed target if all major projects on time and under budget
Results: Heim plant ahead of schedule and under budget |
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1.25 |
Sustainability
(10%) |
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Talent Management |
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Continue focus on identification and retention of
talented employees Actual performance: unplanned turnover flat compared to 2019
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No negative discretion |
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ESG (Environmental, Social, Governance) |
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Continue to advance disclosures and investor
dialogue Actual performance: published third annual Sustainability Report; established and on track to achieve methane intensity targets and significantly
improved disclosure and dialogue with the investor community |
|
1.0 |
2021 Bonus Plan Payouts. The Compensation Committee separately reviewed our safety performance for 2021, which included
improvements in process and communication, a slight reduction in overall incident rate and a decrease in severity. The Compensation Committee did not apply any adjustment to the pool to reflect safety performance.
25
Based on the Companys strong financial and operational performance during 2021, the Committee approved the bonus
pool at 2.0x target. Although actual performance exceeded the 2.0 target amount, the bonus was capped at the 2.0x maximum payout level.
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Category |
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Payout Factor |
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Weight |
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Weighted
Factor |
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Financial |
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2.5 |
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60% |
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1.5 |
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Operational |
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1.57 |
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30% |
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0.47 |
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Sustainability |
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1.0 |
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10% |
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0.10 |
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|
|
Total Calculated Payout |
|
|
|
|
|
|
|
|
|
|
2.07 |
|
|
|
|
|
|
|
|
Total Approved Payout (capped for maximum payout under the plan)
|
|
|
|
2.00 |
|
|
|
|
|
|
Individual Performance Multiplier. The Compensation Committee also evaluated the executive group and each officers
individual performance for the year and determined that there were no special circumstances that would result in adjustment to any NEOs performance factor for 2021. As a result, the Compensation Committee determined a performance multiplier of
1.0x should be applied to each named executive officer for 2021 based on the officers individual performance and performance as part of the executive team.
Settlement of 2021 Bonus Awards. The following table reflects the actual awards received by our NEOs under the 2021 Bonus Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Target Bonus ($) |
|
|
Individual Performance Factor
|
|
|
Company Performance Factor
|
|
|
Actual Bonus Paid (Cash) |
|
Meloy |
|
|
1,750,000 |
|
|
|
1.00 |
|
|
|
2.00 |
|
|
|
3,500,000 |
|
Kneale |
|
|
575,000 |
|
|
|
1.00 |
|
|
|
2.00 |
|
|
|
1,150,000 |
|
McDonie |
|
|
525,000 |
|
|
|
1.00 |
|
|
|
2.00 |
|
|
|
1,050,000 |
|
Prior |
|
|
525,000 |
|
|
|
1.00 |
|
|
|
2.00 |
|
|
|
1,050,000 |
|
Muraro |
|
|
525,000 |
|
|
|
1.00 |
|
|
|
2.00 |
|
|
|
1,050,000 |
|
2022 Annual Incentive Cash Compensation Program. For 2022, our NEOs are eligible to receive annual cash awards under the 2022
Annual Incentive Cash Compensation Program (the 2022 Bonus Plan), which was approved by the Compensation Committee in January 2022. The payments under the 2022 Bonus Plan consist of cash awards that may be made under our 2010 Stock
Incentive Plan. Our evaluation of performance in the 2022 Bonus Plan includes consideration of performance on multiple factors within three general categories and with a safety category overlay, substantially similar to our 2021 incentive plan
design.
26
Long-Term Equity Incentives
Equity compensation directly aligns the interests of the NEOs with those of our stockholders. In 2021, the Company granted equity compensation under our Stock Incentive
Plan as follows:
|
|
|
|
|
Type of Equity
Award |
|
Weight |
|
Description |
Performance Share
Units (PSUs) |
|
50% |
|
Vest at the end of a three-year period contingent on the achievement of the Companys total shareholder return (TSR) relative to the TSR of a specified comparator group of
publicly-traded midstream companies (the LTIP Peer Group) measured over the three year period |
Restricted Stock Units
(RSUs) |
|
50% |
|
Vest in full at the end of a three-year period based solely on continued service; RSUs help to secure and retain executives and instill an ownership mentality |
We express target long-term equity incentive awards as a total dollar value based on a percentage of the NEOs base salary. For
awards granted in 2021, the specified percentage of each NEOs base salary used for purposes of determining the amount of long-term equity incentive awards granted and the corresponding dollar values are set forth in the following table:
|
|
|
|
|
|
|
|
|
NEO |
|
Target Award
(% of Salary) |
|
Target Award
($ Value) |
|
Number of RSUs Granted
(#) |
|
Number of PSUs Granted
(#) |
|
|
|
|
|
Meloy |
|
800% |
|
7,000,000 |
|
118,967 |
|
118,967 |
Kneale |
|
400% |
|
2,300,000 |
|
39,089 |
|
39,089 |
McDonie |
|
325% |
|
1,706,250 |
|
28,998 |
|
28,998 |
Pryor |
|
325% |
|
1,706,250 |
|
28,998 |
|
28,998 |
Muraro |
|
325% |
|
1,706,250 |
|
28,998 |
|
28,998 |
The number of shares subject to each award is determined by dividing the total dollar value allocated to the award by the ten-day average closing price of the shares measured over a period prior to the date of grant.
2021 PSU
Plan Design
PSUs vest depending on the satisfaction of certain service-related conditions and the Companys TSR relative to the TSR of the members
of the LTIP Peer Group measured over a single three-year performance period. For the 2021 PSUs, the LTIP Peer Group was composed of the companies that make up the Alerian US Midstream Index (AMUS), using the following payout schedule:
|
|
|
Relative TSR Attainment vs.
Companies in the Alerian US
Midstream Index |
|
Guideline Performance Percentage (% of target) |
Below 25th
percentile |
|
0% |
25th
percentile |
|
50% |
55th
percentile |
|
100% |
75th percentile or higher |
|
250% |
Target payout is set at the 55th percentile to ensure that a target payout requires
performance above the median of our performance peers. Payout for performance between threshold and target or between target and maximum are calculated using straight-line interpolation.
27
The performance period for the 2021 PSUs began on January 1, 2021 and ends on December 31, 2023 and TSR for
the period is measured using the following formula:
|
|
|
|
|
|
|
|
|
TSR = |
|
Average closing price at end of period + dividends paid over period |
|
|
|
Average closing price at beginning of period |
|
|
2019 2021 PSU Plan Payout
The PSUs granted to our NEOs in 2019 used a similar structure as the 2021 PSUs except that the performance period consisted of three annual periods (2019, 2020 and
2021) and a cumulative three year period that began on January 1, 2019 and ended on December 31, 2021. The LTIP Peer Group for the 2019 PSUs was a subset of the midstream companies included in the 2019 compensation peer group. The TSR
performance factor was based on relative TSR performance over the designated weighting periods as follows:
|
|
|
Weighting Period |
|
Percent of Award |
Annual relative TSR for Year 1 |
|
25% |
Annual relative TSR for Year 2 |
|
25% |
Annual relative TSR for Year 3 |
|
25% |
Cumulative relative TSR over the
three-year performance period |
|
25% |
On January 20, 2022, our Compensation Committee determined that the overall vesting percentage that was earned for the 2019 PSUs
was 200% of target grant amounts, and the corresponding shares became vested.
|
|
|
|
|
|
|
Performance Period |
|
Targa Percentile Rank |
|
Weight |
|
Percent of Target
Earned |
Year 1 TSR |
|
50th |
|
25% |
|
100% |
Year 2 TSR |
|
67th |
|
25% |
|
200% |
Year 3 TSR |
|
100th |
|
25% |
|
250% |
Cumulative 3 year TSR |
|
100th |
|
25% |
|
250% |
Weighted Average |
|
|
|
|
|
200% |
Because vesting did not occur until our Compensation Committee determined the achievement of applicable performance goals at the
beginning of 2022, these awards were still considered outstanding as of December 31, 2021 for purposes of the compensation tables that follow this CD&A.
OTHER EXECUTIVE COMPENSATION PRACTICES AND POLICIES
Stock Ownership Guidelines
Our Compensation Committee has adopted Stock Ownership Guidelines for our independent directors and executive officers. We believe that our
Stock Ownership Guidelines align the interests of our executive officers and independent directors with the interests of our stockholders. The guidelines below were established with advice from the Compensation Consultant and are believed to follow
market standards.
|
|
|
|
|
Ownership Requirement |
Chief Executive Officer |
|
5.0 x base salary |
Other Executives |
|
3.0 x base salary |
Nonemployee Directors |
|
5.0 x annual cash retainer |
The CEO, executive officers and directors have five years from the date first subject to the guidelines to meet the applicable ownership
levels. Stock owned directly by an officer or independent director as well as unvested restricted stock units will count for purposes of determining stock ownership levels.
28
Anti-Hedging and Anti-Pledging Policy
All of our officers, employees and directors are subject to our Insider Trading Policy, which, among other things, prohibits officers, employees and directors from
engaging in certain short-term or speculative transactions involving our securities. Specifically, the policy provides that officers, employees and directors may not engage in the following transactions: (i) the purchase of our common stock on
margin, (ii) short sales of our common stock, or (iii) the purchase or sale of options of any kind, whether puts or calls, or other derivative securities, relating to our common stock. We have also amended our Insider Trading Policy so
that officers, employees and directors may not enter into pledges of our securities as collateral. In order to allow time to unwind any existing pledge arrangements, such arrangements must be cancelled or modified so that the securities are no
longer pledged by April 2022.
Recoupment Clawback Policy
In December 2019, our Board adopted an executive compensation clawback policy. Our policy provides that performance-based incentive compensation (cash or equity) paid
to our Section 16 officers may be recovered in the event of a restatement of the Companys financial results, or under certain other circumstances, such as an officers misconduct that results in an adverse impact on the
Companys financial or stock price performance. In connection with such events, the Compensation Committee will have the right to require the reimbursement or forfeiture of any performance-based incentive payments, including payments under the
annual incentive plan and performance-based PSUs, paid to the officer to the extent permitted by applicable law. The clawback policy applies to all performance-based incentive compensation granted following the adoption of the clawback policy.
In addition, the Company will take action to modify the clawback policy to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010 should the SEC determine and implement final rules. Furthermore, restricted stock, restricted stock unit and performance share unit agreements covering awards made to our named executive officers and other applicable employees include
language providing that any compensation, payments or benefits provided under such an award (including profits realized from the sale of earned shares) are subject to clawback to the extent required by applicable law.
Compensation Risk Assessment
The Compensation
Committee reviews the relationship between our risk management policies and compensation policies and practices each year and, for 2021, has concluded that we do not have any compensation policies or practices that expose us to excessive or
unnecessary risks that are reasonably likely to have a material adverse effect on us. Because our Compensation Committee retains the sole discretion for determining the actual amount paid to executives pursuant to our annual incentive bonus program,
our Compensation Committee is able to assess the actual behavior of our executives as it relates to risk-taking in awarding bonus amounts. In addition, the performance objectives applicable to our annual bonus program consist of diverse company-wide
and business unit goals, including commercial, operational and financial goals to support our business plan and priorities, which we believe lessens the potential incentive to focus on meeting certain short-term goals at the expense of longer-term
risk. Further, our use of long-term equity incentive compensation for 2021 with three-year vesting periods in combination with meaningful ownership requirements serves our executive compensation programs goal of aligning the interests of
executives and shareholders, thereby reducing the incentives to unnecessary risk-taking.
Retirement, Health and Welfare, and Other
Benefits
Employees are eligible to participate in a section 401(k) tax-qualified, defined contribution plan (the
401(k) Plan), which helps employees save for retirement through a tax-advantaged combination of employee and company contributions and directly manage their retirement plan assets through a variety
of investment options. Under the plan, participants may elect to defer up to 30% of their eligible compensation on a pre-tax basis (or on a post-tax basis via a Roth
contribution), subject to certain limitations under the Internal Revenue Code of 1986, as amended (the Code). In addition, we make the following contributions to the 401(k) Plan for the benefit of our
29
employees, including our NEOs: (i) 3% of the employees eligible compensation, and (ii) an amount equal to the employees contributions to the 401(k) Plan up to 5% of the
employees eligible compensation. In addition, we may also make discretionary contributions to the 401(k) Plan for the benefit of employees depending on our performance. Company contributions to the 401(k) Plan may be subject to certain
limitations under the Code for certain employees. We do not maintain a defined benefit pension plan or a nonqualified deferred compensation plan for our NEOs or other employees.
All full-time employees, including our NEOs, are eligible to participate in our health and welfare benefit programs, including medical, life insurance, dental coverage
and disability insurance. It is the Compensation Committees policy not to pay for perquisites for any of our NEOs, other than minimal parking subsidies.
Change in Control and Severance Benefits
Our ability to build the exceptional leadership team we have today was due in large part to
our having the full complement of compensation tools available to us and the flexibility to use them. This includes the ability to leverage change in control and severance benefits.
The Compensation Committee believes that together, our change in control and severance benefits, which are guided by our governance practices and policies, are
well-aligned with those of our peers. More importantly, they foster stability and focus within the senior leadership team by helping to ensure that personal concerns regarding job security do not hinder mergers, reorganizations or other transactions
that may be in the best interest of shareholders.
Please see Executive CompensationPotential Payments Upon Termination or Change in Control below
for further information.
Accounting Considerations
We account for the equity compensation expense for our employees, including our named executive officers, under the rules of Financial Accounting Standards Board
(FASB), Accounting Standards Codification (ASC) Topic 718. This regulation requires us to record an expense for each award of long-term equity incentive compensation over the vesting period of the award based on the fair
value at the grant date. Accounting rules also require us to record cash compensation as an expense at the time the obligation is accrued.
Tax Considerations
We consider the impact of
various tax rules in implementing our compensation program. Section 162(m) of the Code (Section 162(m)) generally limits the deductibility by a corporation of compensation in excess of $1,000,000 paid to certain executive
officers. Our Compensation Committee believes that its primary responsibility is to provide a compensation program that is consistent with its compensation philosophy and supports the achievement of its compensation objectives. Therefore the
Compensation Committee has retained the authority to grant appropriate compensation items or awards to our service providers notwithstanding an adverse tax or accounting treatment for that compensation.
Compensation Committee Report
Messrs. Davis,
Crisp and Evans and Ms. Bowman are the members of our Compensation Committee. In fulfilling its oversight responsibilities, the Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained
in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2021. Based on these reviews and discussions, the Compensation Committee
recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the year ended
December 31, 2021.
30
The information contained in this report shall not be deemed to be soliciting material or to be
filed with the SEC, nor shall such information be incorporated by reference into any future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate
it by reference into a document filed under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act.
The Compensation
Committee
|
|
|
|
|
|
|
Waters S. Davis, IV, |
|
Charles R. Crisp, |
|
Robert B. Evans, |
|
Beth A. Bowman |
|
|
|
|
Chairman |
|
Committee Member |
|
Committee Member |
|
Committee Member |
31
EXECUTIVE COMPENSATION
Summary Compensation Table for 2021
The following
Summary Compensation Table sets forth the compensation of our named executive officers for 2021, 2020 and 2019. Additional details regarding the applicable elements of compensation in the Summary Compensation Table are provided in the footnotes
following the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus (1) |
|
|
Stock Awards ($) (2) |
|
|
All Other Compensation (3) |
|
|
Total |
|
Matthew J. Meloy |
|
|
2021 |
|
|
|
$875,000 |
|
|
|
$3,500,000 |
|
|
|
$10,289,456 |
|
|
|
$27,484 |
|
|
|
$14,691,940 |
|
Chief Executive Officer |
|
|
2020 |
|
|
|
779,967 |
|
|
|
1,750,000 |
|
|
|
9,548,519 |
|
|
|
24,110 |
|
|
|
12,102,596 |
|
|
|
|
2019 |
|
|
|
587,500 |
|
|
|
1,920,000 |
|
|
|
3,921,450 |
|
|
|
23,710 |
|
|
|
6,452,660 |
|
|
|
|
|
|
|
|
Jennifer R. Kneale |
|
|
2021 |
|
|
|
$575,000 |
|
|
|
$1,150,000 |
|
|
|
$3,380,808 |
|
|
|
$26,015 |
|
|
|
$5,131,823 |
|
Chief Financial Officer |
|
|
2020 |
|
|
|
524,271 |
|
|
|
575,000 |
|
|
|
3,137,404 |
|
|
|
24,056 |
|
|
|
4,260,731 |
|
|
|
|
2019 |
|
|
|
391,667 |
|
|
|
640,000 |
|
|
|
2,091,404 |
|
|
|
23,274 |
|
|
|
3,146,345 |
|
Patrick J. McDonie |
|
|
2021 |
|
|
|
$525,000 |
|
|
|
$1,050,000 |
|
|
|
$2,508,037 |
|
|
|
$25,770 |
|
|
|
$4,108,807 |
|
President Gathering and Processing |
|
|
2020 |
|
|
|
501,146 |
|
|
|
525,000 |
|
|
|
2,327,447 |
|
|
|
23,947 |
|
|
|
3,377,540 |
|
|
|
|
2019 |
|
|
|
495,833 |
|
|
|
800,000 |
|
|
|
2,124,127 |
|
|
|
23,492 |
|
|
|
3,443,452 |
|
|
|
|
|
|
|
|
D. Scott Pryor |
|
|
2021 |
|
|
|
$525,000 |
|
|
|
$1,050,000 |
|
|
|
$2,508,037 |
|
|
|
$25,770 |
|
|
|
$4,108,807 |
|
President Logistics and |
|
|
2020 |
|
|
|
501,146 |
|
|
|
525,000 |
|
|
|
2,327,447 |
|
|
|
23,947 |
|
|
|
3,377,540 |
|
Transportation |
|
|
2019 |
|
|
|
495,833 |
|
|
|
800,000 |
|
|
|
2,124,127 |
|
|
|
23,492 |
|
|
|
3,443,452 |
|
Robert M. Muraro |
|
|
2021 |
|
|
|
$525,000 |
|
|
|
$1,050,000 |
|
|
|
$2,508,037 |
|
|
|
$25,770 |
|
|
|
$4,108,807 |
|
Chief Commercial Officer |
|
|
2020 |
|
|
|
501,146 |
|
|
|
525,000 |
|
|
|
2,327,447 |
|
|
|
23,947 |
|
|
|
3,377,540 |
|
|
|
|
2019 |
|
|
|
491,667 |
|
|
|
800,000 |
|
|
|
2,124,127 |
|
|
|
23,492 |
|
|
|
3,439,286 |
|
(1) |
For 2021, amounts reported in the Bonus column represents the portion of the bonus awarded pursuant
to our 2021 Bonus Plan that was paid to the named executive officers in cash. Please see Compensation Discussion and AnalysisComponents of Executive Compensation Program for Fiscal 2021Annual Incentive Bonus. As discussed in
CD&A, payments pursuant to our Bonus Plan are ultimately discretionary and not based solely on a formulaic performance structure. |
(2) |
Amounts reported in the Stock Awards column for 2021 represent the aggregate grant date fair value
of restricted stock unit and performance share unit awards granted under our Stock Incentive Plan in 2021 computed in accordance with FASB ASC Topic 718, disregarding the estimate of forfeitures. Assumptions used in the calculation of these amounts
are included in Note 24Compensation Plans to our Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal year 2021. Detailed information about the value
attributable to specific awards is reported in the table under Grants of Plan-Based Awards for 2021 below. The grant date fair value of each restricted stock unit subject to the restricted stock unit awards granted on
January 19, 2021, assuming vesting will occur, is $30.13. The grant date fair value of each performance share unit subject to the performance share unit awards granted on January 19, 2021, assuming vesting will occur, is $56.36 which is
the per unit fair value determined using a Monte Carlo Simulation valuation methodology in accordance with FASB ASC Topic 718. Assuming, instead, a payout percentage for these performance unit awards of 250%, which is the maximum payout percentage
under the awards, the aggregate grant date fair value of the equity-settled performance unit awards granted on January 19, 2021 for each named executive officer is as follows: Mr. Meloy $16,762,450; Ms. Kneale
$5,507,640; Mr. McDonie $4,085,818; Mr. Pryor $4,085,818; and Mr. Muraro $4,085,818. |
32
(3) |
For 2021, All Other Compensation includes (i) the aggregate value of all employer-provided
contributions to each named executive officer under our 401(k) plan and (ii) the dollar value of life insurance premiums paid by the Company with respect to life insurance for the benefit of each named executive officer. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
401(k) and Profit Sharing Plan |
|
|
Dollar Value of Life
Insurance Premiums |
|
|
Total |
|
Matthew J. Meloy |
|
|
$23,200 |
|
|
|
$4,284 |
|
|
|
$27,484 |
|
Jennifer R. Kneale |
|
|
23,200 |
|
|
|
2,815 |
|
|
|
26,015 |
|
Patrick J. McDonie |
|
|
23,200 |
|
|
|
2,570 |
|
|
|
25,770 |
|
D. Scott Pryor |
|
|
23,200 |
|
|
|
2,570 |
|
|
|
25,770 |
|
Robert M. Muraro |
|
|
23,200 |
|
|
|
2,570 |
|
|
|
25,770 |
|
Grants of Plan-Based Awards for 2021
The following table and the footnotes thereto provide information regarding grants of plan-based equity awards made to the named executive officers during
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Grant Date |
|
|
Estimated Future Payouts Under Performance
Share Unit Awards |
|
|
Equity Awards: Number of Units |
|
|
Grant Date Fair Value of Equity Awards (2) |
|
|
Threshold (#) |
|
|
Target (#) |
|
|
Maximum (#) |
|
|
|
|
|
|
|
|
Mr. Meloy |
|
|
01/19/21 (1) |
|
|
|
59,484 |
|
|
|
118,967 |
|
|
|
297,418 |
|
|
|
118,967 |
|
|
|
10,289,456 |
|
|
|
|
|
|
|
|
Ms. Kneale |
|
|
01/19/21 (1) |
|
|
|
19,545 |
|
|
|
39,089 |
|
|
|
97,723 |
|
|
|
39,089 |
|
|
|
3,380,808 |
|
|
|
|
|
|
|
|
Mr. McDonie |
|
|
01/19/21 (1) |
|
|
|
14,499 |
|
|
|
28,998 |
|
|
|
72,495 |
|
|
|
28,998 |
|
|
|
2,508,037 |
|
|
|
|
|
|
|
|
Mr. Pryor |
|
|
01/19/21 (1) |
|
|
|
14,499 |
|
|
|
28,998 |
|
|
|
72,495 |
|
|
|
28,998 |
|
|
|
2,508,037 |
|
|
|
|
|
|
|
|
Mr. Muraro |
|
|
01/19/21 (1) |
|
|
|
14,499 |
|
|
|
28,998 |
|
|
|
72,495 |
|
|
|
28,998 |
|
|
|
2,508,037 |
|
(1) |
These grants on January 19, 2021 are the annual long-term equity incentive awards for 2021 granted to our
named executive officers in the form of restricted stock unit and performance share unit awards granted under our Stock Incentive Plan. For a detailed description of how performance achievements will be determined for performance share units, see
Compensation Discussion and Analysis 2021 Components of Executive Compensation Program In Detail 2021 PSU Plan Design. |
(2) |
The value within the Grant Date Fair Value of Equity Awards column was determined by multiplying the
shares awarded by the grant date fair value per share computed in accordance with FASB ASC Topic 718: $30.13 for the January 19, 2021 restricted stock unit awards; and $56.36 for the January 19, 2021 performance share units.
|
Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table
A discussion of 2021 salaries, bonuses, incentive plans and awards is set forth in Compensation Discussion and Analysis, including
a discussion of the material terms and conditions of the 2021 restricted stock unit and performance share unit awards under our Stock Incentive Plan.
33
Outstanding Equity Awards at 2021 Fiscal Year-End
The following table and the footnotes related thereto provide information regarding equity-based awards outstanding as of December 31, 2021 for each of
our named executive officers. None of our named executive officers held any outstanding stock option awards as of December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
Name |
|
Number of Shares That Have Not Vested (1) |
|
|
Market Value of Shares That Have Not Vested (2) |
|
|
Performance Share Units: Number of Unearned Units
That Have Not Vested (3) |
|
|
Performance Share Units: Market
or Payout Value of Unearned Units That Have Not Vested (4) |
|
Matthew J. Meloy |
|
|
313,020 |
|
|
|
$16,352,165 |
|
|
|
512,301 |
|
|
|
$26,762,604 |
|
Jennifer R. Kneale |
|
|
127,317 |
|
|
|
6,651,040 |
|
|
|
168,328 |
|
|
|
$8,793,455 |
|
Patrick J. McDonie |
|
|
121,045 |
|
|
|
6,323,391 |
|
|
|
124,873 |
|
|
|
$6,523,366 |
|
D. Scott Pryor |
|
|
121,045 |
|
|
|
6,323,391 |
|
|
|
124,873 |
|
|
|
$6,523,366 |
|
Robert M. Muraro |
|
|
131,545 |
|
|
|
6,871,911 |
|
|
|
124,873 |
|
|
|
$6,523,366 |
|
(1) |
Represents the following shares of restricted stock units (and earned performance units) under our Stock
Incentive Plan held by our named executive officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew J. Meloy |
|
|
Jennifer R. Kneale |
|
|
Patrick J. McDonie |
|
|
D. Scott Pryor |
|
|
Robert M. Muraro |
|
|
|
|
|
|
|
January 20, 2017 Award (a) |
|
|
35,000 |
|
|
|
21,000 |
|
|
|
31,500 |
|
|
|
31,500 |
|
|
|
42,000 |
|
|
|
|
|
|
|
January 17, 2019 Award (b) |
|
|
36,550 |
|
|
|
19,493 |
|
|
|
19,798 |
|
|
|
19,798 |
|
|
|
19,798 |
|
|
|
|
|
|
|
January 17, 2019 Award (c) |
|
|
36,550 |
|
|
|
19,493 |
|
|
|
19,798 |
|
|
|
19,798 |
|
|
|
19,798 |
|
|
|
|
|
|
|
January 16, 2020 Award (d) |
|
|
85,953 |
|
|
|
28,242 |
|
|
|
20,951 |
|
|
|
20,951 |
|
|
|
20,951 |
|
|
|
|
|
|
|
January 19, 2021 Award (e) |
|
|
118,967 |
|
|
|
39,089 |
|
|
|
28,998 |
|
|
|
28,998 |
|
|
|
28,998 |
|
|
|
|
|
|
|
Total |
|
|
313,020 |
|
|
|
127,317 |
|
|
|
121,045 |
|
|
|
121,045 |
|
|
|
131,545 |
|
|
(a) |
The restricted stock units awarded January 20, 2017 as a retention grant vest (i) 30% on January 20,
2021, (ii) 30% on January 20, 2022 and (iii) 40% on January 20, 2023, contingent upon continuous employment through the end of the vesting period. The underlying shares of stock are not issued until vesting at the end of the vesting
period. |
|
(b) |
The restricted stock units awarded January 17, 2019 are subject to the following vesting schedule: 100% of
the restricted stock units vest on January 17, 2022, contingent upon continuous employment or the satisfaction of certain other service-related conditions upon the executives retirement, in either case, through the end of the vesting
period. The underlying shares of stock are not issued until vesting at the end of the vesting period. |
|
(c) |
The awards in this row originally related to performance share units granted in 2019, but for which the
performance period ended on December 31, 2021. Because the awards were no longer subject to performance conditions, but would not be deemed vested until the Compensation Committee determined performance levels in early 2022, they
are still deemed to be outstanding for purposes of this table, subject only to time-based vesting requirements. The target awards were multiplied by 200%, the actual adjustment factor applied to the awards upon determination of performance levels in
2022. |
|
(d) |
The restricted stock units awarded January 16, 2020 are subject to the following vesting schedule: 100% of
the restricted stock units vest on January 16, 2023, contingent upon continuous employment or the satisfaction of certain other service-related conditions upon the executives retirement, in either case, through the end of the vesting
period. The underlying shares of stock are not issued until vesting at the end of the vesting period. |
|
(e) |
The restricted stock units awarded January 19, 2021 are subject to the following vesting schedule: 100% of
the restricted stock units vest on January 19, 2024, contingent upon continuous employment or the satisfaction of certain other service-related conditions upon the executives retirement, in either case, through the end of the vesting
period. The underlying shares of stock are not issued until vesting at the end of the vesting period. |
34
The treatment of the outstanding restricted stock unit awards upon certain terminations of employment
(including retirement) or the occurrence of a change in control is described below under Potential Payments Upon Termination or Change in Control.
(2) |
The dollar amounts shown are determined by multiplying the number of shares of restricted stock units reported
in the table by the closing price of a share of our common stock on December 31, 2021 ($52.24), which was the last trading day of fiscal 2021. The amounts do not include any related dividends accrued with respect to the awards.
|
(3) |
Represents the following performance share units linked to the performance of the Companys common stock
held by our named executive officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 16, 2020 Award |
|
|
January 19, 2021 Award |
|
|
|
|
|
|
|
|
Awards Granted
|
|
|
(a) Adjusted for Performance Factor (TSR) |
|
|
Awards Granted
|
|
|
(b) Adjusted for Performance Factor (TSR) |
|
Matthew J. Meloy |
|
|
85,953 |
|
|
|
214,883 |
|
|
|
118,967 |
|
|
|
297,418 |
|
Jennifer R. Kneale |
|
|
28,242 |
|
|
|
70,605 |
|
|
|
39,089 |
|
|
|
97,723 |
|
Patrick J. McDonie |
|
|
20,951 |
|
|
|
52,378 |
|
|
|
28,998 |
|
|
|
72,495 |
|
D. Scott Pryor |
|
|
20,951 |
|
|
|
52,378 |
|
|
|
28,998 |
|
|
|
72,495 |
|
Robert M. Muraro |
|
|
20,951 |
|
|
|
52,378 |
|
|
|
28,998 |
|
|
|
72,495 |
|
|
(a) |
Reflects the target number of performance share units granted to the named executive officers on
January 16, 2020 multiplied by a performance percentage of 250%, which in accordance with SEC rules is the next higher performance level under the award that exceeds 2021 performance. Vesting of these awards is contingent upon continuous
employment or the satisfaction of certain other service-related conditions upon the executives retirement, in either case, through the end of the performance period, which ends December 31, 2022, and the Companys performance over
the applicable performance period measured against a peer group of companies. The underlying shares of stock are not issued until vesting levels have been determined by the Compensation Committee. |
|
(b) |
Reflects the target number of performance share units granted to the named executive officers on
January 19, 2021 multiplied by a performance percentage of 250%, which in accordance with SEC rules is the next higher performance level under the award that exceeds 2021 performance. Vesting of these awards is contingent upon continuous
employment or the satisfaction of certain other service-related conditions upon the executives retirement, in either case, through the end of the performance period, which ends December 31, 2023, and the Companys performance over
the applicable performance period measured against a peer group of companies. The underlying shares of stock are not issued until vesting levels have been determined by the Compensation Committee. |
The treatment of the outstanding performance share unit awards upon certain terminations of employment (including retirement) or the occurrence of a change in
control is described below under Potential Payments Upon Termination or Change in Control.
(4) |
The dollar amounts shown are determined by multiplying the number of shares of performance share units reported
in the table by the closing price of a share of our common stock on December 31, 2021 ($52.24), which was the last trading day of fiscal 2021. The amounts do not include any related dividends accrued with respect to the awards.
|
Option Exercises and Stock Vested in 2021
The following table provides the amount realized during 2021 by each named executive officer upon the vesting of restricted stock and restricted stock units.
None of our named executive officers exercised any option awards during the 2021 year and, currently, there are no options outstanding under any of our plans.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
Name |
|
Number of Shares Acquired on Vesting (#) |
|
|
Value Realized on Vesting
(1) ($) |
|
Matthew J. Meloy |
|
|
95,428 |
|
|
|
$2,864,085 |
|
Jennifer R. Kneale |
|
|
37,972 |
|
|
|
1,131,244 |
|
Patrick J. McDonie |
|
|
50,525 |
|
|
|
1,514,788 |
|
D. Scott Pryor |
|
|
50,525 |
|
|
|
1,514,788 |
|
Robert M. Muraro |
|
|
52,245 |
|
|
|
1,564,245 |
|
35
(1) |
Computed with respect to the restricted stock awards granted under our Stock Incentive Plan by multiplying the
number of shares of stock vesting by the closing price of a share of common stock on the January 6, 2021 vesting date ($28.55), the January 17, 2021 vesting date ($30.03), and the January 20, 2021 vesting date ($29.77) and does not
include associated dividends accrued during the vesting period. |
Pension Benefits
Other than our 401(k) plan, we do not have any plan that provides for payments or other benefits at, following, or in connection with,
retirement.
Non-Qualified Deferred Compensation
We do not have any plan that provides for the deferral of compensation on a basis that is not tax qualified.
Potential Payments Upon Termination or Change in Control
Aggregate Payments
The table below reflects the
aggregate amount of payments and benefits that we believe our named executive officers would have received under the Change in Control Program (described below) and Stock Incentive Plan upon certain specified termination of employment and/or a
change in control events, in each case, had such event occurred on December 31, 2021. Details regarding individual plans and arrangements follow the table. The amounts below constitute estimates of the amounts that would be paid to our named
executive officers upon each designated event, and do not include any amounts accrued through fiscal 2021 year-end that would be paid in the normal course of continued employment, such as accrued but unpaid
salary and benefits generally available to all salaried employees. The actual amounts to be paid are dependent on various factors, which may or may not exist at the time a named executive officer is actually terminated and/or a change in control
actually occurs. Therefore, such amounts and disclosures should be considered forward-looking statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Change in Control (No Termination) |
|
Qualifying Termination Following Change
in Control |
|
Termination by us without Cause |
|
Termination for Death or Disability |
Matthew J. Meloy |
|
|
$4,351,210 |
|
|
|
$50,324,448 |
|
|
|
|
|
|
|
$42,425,148 |
|
Jennifer R. Kneale |
|
|
2,472,423 |
|
|
|
18,431,482 |
|
|
|
|
|
|
|
14,981,482 |
|
Patrick J. McDonie |
|
|
3,165,843 |
|
|
|
15,611,297 |
|
|
|
|
|
|
|
12,445,601 |
|
D. Scott Pryor |
|
|
3,165,843 |
|
|
|
15,613,817 |
|
|
|
|
|
|
|
12,445,601 |
|
Robert M. Muraro |
|
|
3,841,727 |
|
|
|
16,295,786 |
|
|
|
|
|
|
|
13,121,486 |
|
Executive Officer Change in Control Severance Program
We adopted the Change in Control Program on and effective as of January 12, 2012, and amended in 2015. Each of our named executive officers was an
eligible participant in the Change in Control Program during the 2021 calendar year.
The Change in Control Program is administered by our Vice
PresidentHuman Resources. The Change in Control Program provides that if, in connection with or within 18 months after a Change in Control, a participant suffers a Qualifying Termination, then the individual will
receive a severance payment, paid in a single lump sum cash payment within 60 days following the date of termination, equal to three times (i) the participants annual salary as of the date of the Change in Control or the date of
termination, whichever is greater, and (ii) the amount of the participants annual salary multiplied by the participants most recent target bonus percentage specified by the Compensation Committee prior to the Change in
Control. In addition, the participant (and his eligible dependents, as applicable) will receive the continuation of their medical and dental benefits until the earlier to occur of (a) three years from the date of termination, or (b) the
date the participant becomes eligible for coverage under another employers plan.
36
For purposes of the Change in Control Program, the following terms will generally have the meanings set
forth below:
Cause means discharge of the participant by us on the following grounds: (i) the participants gross
negligence or willful misconduct in the performance of his duties, (ii) the participants conviction of a felony or other crime involving moral turpitude, (iii) the participants willful refusal, after 15 days written
notice, to perform his material lawful duties or responsibilities, (iv) the participants willful and material breach of any corporate policy or code of conduct, or (v) the participants willfully engaging in conduct that is
known or should be known to be materially injurious to us or our subsidiaries.
Change in Control means any of the following
events: (i) any person (other than the Partnership) becomes the beneficial owner of more than 20% of the voting interest in us or in the General Partner, (ii) any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company or the General Partner (other than to the Partnership or its affiliates), (iii) a transaction resulting in a person other than Targa Resources GP LLC or an affiliate
being the General Partner of the Partnership, (iv) the consummation of any merger, consolidation or reorganization involving us or the General Partner in which less than 51% of the total voting power of outstanding stock of the surviving or
resulting entity is beneficially owned by the stockholders of the Company or the General Partner, immediately prior to the consummation of the transaction, or (v) a majority of the members of the Board of Directors or the board of directors of
the General Partner is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the applicable Board of Directors before the date of the
appointment or election.
Good Reason means: (i) a material reduction in the participants authority, duties or
responsibilities, (ii) a material reduction in the participants base compensation, or (iii) a material change in the geographical location at which the participant must perform services. The individual must provide notice to us of
the alleged Good Reason event within 90 days of its occurrence and we have the opportunity to remedy the alleged Good Reason event within 30 days from receipt of the notice of such allegation.
Qualifying Termination means (i) an involuntary termination of the individuals employment by us without Cause or (ii) a
voluntary resignation of the individuals employment for Good Reason.
All payments due under the Change in Control Program will be conditioned on
the execution and non-revocation of a release for our benefit and the benefit of our related entities and agents. The Change in Control Program will supersede any other severance program for eligible
participants in the event of a Change in Control, but will not affect accelerated vesting of any equity awards under the terms of the plans governing such awards.
If amounts payable to a named executive officer under the Change in Control Program, together with any other amounts that are payable by us as a result of a
Change in Control (collectively, the Payments), exceed the amount allowed under section 280G of the Code for such individual, thereby subjecting the individual to an excise tax under section 4999 of the Code, then, depending on which
method produces the largest net after-tax benefit for the recipient, the Payments shall either be: (i) reduced to the level at which no excise tax applies or (ii) paid in full, which would subject
the individual to the excise tax.
The following table reflects payments that would have been made to each of the named executive officers under the
Change in Control Program in the event there was a Change in Control and the officer incurred a Qualifying Termination, in each case as of December 31, 2021.
|
|
|
|
|
Name |
|
Qualifying
Termination
Following
Change in
Control (1) |
|
Matthew J. Meloy |
|
|
$7,899,300 |
|
Jennifer R. Kneale |
|
|
3,450,000 |
|
Patrick J. McDonie |
|
|
3,165,696 |
|
D. Scott Pryor |
|
|
3,168,216 |
|
Robert M. Muraro |
|
|
3,174,300 |
|
37
(1) |
Includes 3 years worth of continued participation in our medical and dental plans, calculated based on the
monthly employer-paid portion of the premiums for our medical and dental plans as of December 31, 2021 for each named executive officer and the officers eligible dependents in the following amounts: (a) Mr. Meloy $24,300, (b) Ms.
Kneale $0, (c) Mr. McDonie $15,696, (d) Mr. Pryor $18,216, and (e) Mr. Muraro$24,300. |
Stock Incentive
Plan
Our named executive officers held outstanding restricted stock units under our form of restricted stock unit agreement (the Stock
Agreement), and performance share units under our form of performance share unit agreement (the Performance Agreement) and the Stock Incentive Plan as of December 31, 2021. The terms applicable to certain Change in Control
vesting scenarios within the outstanding Performance Agreements were amended in 2021 in order to bring their terms more in line with practices at our peer group, and the description below reflects those amendments. If a Change in Control
occurs and the named executive officer has (i) remained continuously employed by us from the date of grant to the date upon which such Change in Control occurs and their employment was terminated by us without Cause or they terminated their
employment for Good Reason, in either case within the 24 month period following a Change in Control, (a Change in Control Termination) or (ii) retired following the date of grant and either performed consulting services for us or
refrained from working for one of our competitors or in a similar role for another company (however, directorships at non-competitors are permitted), through the date of the Change in Control, then,
(a) the restricted stock units granted to the officer under the Stock Agreement, and related dividends then credited to the officer, will fully vest on the date upon which such Change in Control Termination occurs with respect to clause
(i) above or the Change in Control occurs with respect to clause (ii) above, and (b) the performance share units granted to the officer under the Performance Agreement and related dividends credited to the officer will vest based on
the greater of 100% and the actual guideline percentage determined by the Compensation Committee as of the date such Change in Control occurs.
The
Performance Agreements governing awards granted in 2021 have a performance period of January 1, 2021 through December 31, 2023, while the Performance Agreements governing awards granted in 2020 have a performance period of January 1,
2020 through December 31, 2022. Upon a Change in Control, the Compensation Committee will take into account the performance level achieved for the applicable performance period using a deemed performance percentage of the greater of 100% and
the actual guideline percentage. The Performance Agreements governing awards granted in 2019 have four separate performance periods: (1) the first calendar year of the three-year performance period, (2) the second calendar year of the
three-year performance period, (3) the third calendar year of the three-year performance period, and (4) the entirety of the performance period for the full three calendar years. Upon a Change in Control, the Compensation Committee will
take into account the average of the performance level achieved for each of the four performance periods, using the actual performance level achieved with respect to any completed period, and a deemed performance percentage of the greater of 100%
and the actual guideline percentage for any performance period that has not been completed. With respect to all outstanding Performance Agreements, the average performance percentage may be decreased or increased by the Compensation Committee in its
discretion in order to reflect any factors the Compensation Committee deems relevant to properly reflect the event.
Restricted stock units and
performance share units granted to a named executive officer under the Stock Agreement and Performance Agreement, and related dividends then credited to the officer, will also fully vest if the named executive officers employment is terminated
by reason of death or a Disability (as defined below). If a named executive officers employment with us is terminated for any reason other than death, Disability or a Change in Control Termination, then the officers unvested
restricted stock units and performance share units are forfeited to us for no consideration, except that (other than with respect to retention grants for Mr. Meloy, Ms. Kneale, Mr. McDonie, Mr. Pryor and Mr. Muraro), if a
named executive officer retires, the officers awards will continue to vest on the original vesting schedule (unless a Change in Control occurs as described above) if, from the date of the officers retirement or termination through the
applicable vesting date, the named executive officer has either performed consulting services for us or refrained from working for one of our competitors or in a similar role for another company (however, directorships at non-competitors are permitted).
38
The following terms generally have the following meanings for purposes of the Stock Incentive Plan, Stock
Agreements and Performance Agreements:
Affiliate means an entity or organization which, directly or indirectly, controls, is controlled by, or is
under common control with, us.
Change in Control means the occurrence of one of the following events: (i) any person or group acquires or
gains ownership or control (including, without limitation, the power to vote), by way of merger, consolidation, recapitalization, reorganization or otherwise, of more than 50% of the outstanding shares of our voting stock or more than 50% of the
combined voting power of the equity interests in the Partnership or the General Partner, (ii) any person, including a group as contemplated by section 13(d)(3) of the Exchange Act, acquires in any twelve-month period (in one transaction or a
series of related transactions) ownership, directly or indirectly, of 30% or more of the outstanding shares of our voting stock or of the combined voting power of the equity interests in the Partnership or the General Partner, (iii) the
completion of a liquidation or dissolution of us or the approval by the limited partners of the Partnership, in one or a series of transactions, of a plan of complete liquidation of the Partnership, (iv) the sale or other disposition by us of
all or substantially all of our assets in one or more transactions to any person other than an Affiliate, (v) the sale or disposition by either the Partnership or the General Partner of all or substantially all of its assets in one or more
transactions to any person other than to an Affiliate, (vi) a transaction resulting in a person other than Targa Resources GP LLC or an Affiliate being the General Partner of the Partnership, or (vii) as a result of or in connection with a
contested election of directors, the persons who were our directors before such election shall cease to constitute a majority of our Board of Directors.
Disability means a disability that entitles the named executive officer to disability benefits under our long-term disability plan.
The following table reflects amounts that would have been received by each of the named executive officers under the Stock Incentive Plan and related Stock
Agreements and Performance Agreements in the event there was a Change in Control or a Change in Control Termination or their employment was terminated due to death or Disability, each as of December 31, 2021. The amounts reported below assume
that the price per share of our common stock was $52.24, which was the closing price per share of our common stock on December 31, 2021 (the last trading day of fiscal 2021). No amounts are reported assuming retirement as of December 31,
2021, since additional conditions must be met following a named executive officers retirement in order for any restricted stock awards or restricted stock units to become vested.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Change in Control |
|
|
Change in Control Termination |
|
|
Termination for Death or
Disability |
|
Matthew J. Meloy (1) |
|
$ |
8,556,729 |
|
|
$ |
46,627,667 |
|
|
|
$46,627,667 |
|
Jennifer R. Kneale (2) |
|
|
4,713,728 |
|
|
|
17,222,787 |
|
|
|
17,222,787 |
|
Patrick J. McDonie (3) |
|
|
5,442,217 |
|
|
|
14,721,975 |
|
|
|
14,721,975 |
|
D. Scott Pryor (4) |
|
|
5,442,217 |
|
|
|
14,721,975 |
|
|
|
14,721,975 |
|
Robert M. Muraro (5) |
|
|
6,118,101 |
|
|
|
15,397,860 |
|
|
|
15,397,860 |
|
|
(1) |
(a) Of the amount reported under each of the Change in Control column, Change in Control
Termination column and the Termination for Death or Disability column: |
(i) $1,828,400, and $424,550,
respectively, relate to restricted stock units awarded January 20, 2017 as a retention grant which vested or will vest (A) 30% on January 20, 2021, (B) 30% on January 20, 2022 and (C) 40% on January 20, 2023, contingent upon
continuous employment;
(ii) $3,818,744, and $383,775, respectively, relate to performance share units and related dividend rights granted
on January 17, 2019, which have an aggregate performance period that ended on December 31, 2021; however, the awards deemed earned were still deemed to be outstanding as of December 31, 2021, therefore a Change in Control
or termination due to death or Disability could accelerate the time at which the awards could be settled with the executive; and
(iii)
$1,909,372, and $191,888, respectively, relate to restricted stock units and related dividend rights granted on January 17, 2019, which are scheduled to vest January 17, 2022.
39
(b) Of the amount reported under each of the Change in Control Termination
column and the Termination for Death or Disability column:
(i) $4,490,185, and $138,384, respectively, relate to restricted
stock units and related dividend rights granted on January 16, 2020, which are scheduled to vest January 16, 2023;
(ii)
$11,225,488, and $11,225,488, respectively, relate to performance share units and related dividend rights granted on January 16, 2020, which have a performance period that will end on December 31, 2022;
(iii) $6,214,836, and $47,587, respectively, relate to restricted stock units and related dividend rights granted on January 19, 2021,
which are scheduled to vest January 19, 2024; and
(iv) $15,537,116, and $118,967, respectively, relate to performance share units
and related dividend rights granted on January 19, 2021, which have a performance period that will end on December 31, 2023.
|
(2) |
(a) Of the amount reported under each of the Change in Control column, Change in Control
Termination column and the Termination for Death or Disability column: |
(i) $1,097,040, and $254,730,
respectively, relate to restricted stock units awarded January 20, 2017 as a retention grant which vested or will vest (A) 30% on January 20, 2021, (B) 30% on January 20, 2022 and (C) 40% on January 20, 2023, contingent upon
continuous employment;
(ii) $2,036,629, and $204,677, respectively, relate to performance share units and related dividend rights granted
on January 17, 2019, which have an aggregate performance period that ended on December 31, 2021; however, the awards deemed earned were still deemed to be outstanding as of December 31, 2021, therefore a Change in Control
or termination due to death or Disability could accelerate the time at which the awards could be settled with the executive; and
(iii)
$1,018,314, and $102,338, respectively, relate to restricted stock units and related dividend rights granted on January 17, 2019, which are scheduled to vest January 17, 2022.
(b) Of the amount reported under each of the Change in Control Termination column and the Termination for Death or
Disability column:
(i) $1,475,362, and $45,470, respectively, relate to restricted stock units and related dividend rights granted
on January 16, 2020, which are scheduled to vest January 16, 2023;
(ii) $3,688,405, and $113,674, respectively, relate to
performance share units and related dividend rights granted on January 16, 2020, which have a performance period that will end on December 31, 2022;
(iii) $2,042,009, and $15,636, respectively, relate to restricted stock units and related dividend rights granted on January 19, 2021,
which are scheduled to vest January 19, 2024; and
(iv) $5,105,050, and $39,089, respectively, relate to performance share units and
related dividend rights granted on January 19, 2021, which have a performance period that will end on December 31, 2023.
|
(3) |
(a) Of the amount reported under each of the Change in Control column, Change in Control
Termination column and the Termination for Death or Disability column: |
(i) $1,645,560, and $382,095,
respectively, relate to restricted stock units awarded January 20, 2017 as a retention grant which vested or will vest (A) 30% on January 20, 2021, (B) 30% on January 20, 2022 and (C) 40% on January 20, 2023, contingent upon
continuous employment;
(ii) $2,068,495, and $207,879, respectively, relate to performance share units and related dividend rights granted
on January 17, 2019, which have an aggregate performance period that ended on December 31, 2021; however, the awards deemed earned were still deemed to be outstanding as of December 31, 2021, therefore a Change in Control
or termination due to death or Disability could accelerate the time at which the awards could be settled with the executive; and
(iii)
$1,034,248, and $103,940, respectively, relate to restricted stock units and related dividend rights granted on January 17, 2019, which are scheduled to vest January 17, 2022.
(b) Of the amount reported under each of the Change in Control Termination column and the Termination for Death or
Disability column:
(i) $1,094,480, and $33,731, respectively, relate to restricted stock units and related dividend rights granted
on January 16, 2020, which are scheduled to vest January 16, 2023;
40
(ii) $2,736,227, and $84,329, respectively, relate to performance share units and related
dividend rights granted on January 16, 2020, which have a performance period that will end on December 31, 2022.
(iii)
$1,514,856, and $11,599, respectively, relate to restricted stock units and related dividend rights granted on January 19, 2021, which are scheduled to vest January 19, 2024; and
(iv) $3,787,139, and $28,998, respectively, relate to performance share units and related dividend rights granted on January 19, 2021,
which have a performance period that will end on December 31, 2023.
|
(4) |
(a) Of the amount reported under each of the Change in Control column, Change in Control
Termination column and the Termination for Death or Disability column: |
(i) $1,645,560, and $382,095,
respectively, relate to restricted stock units awarded January 20, 2017 as a retention grant which vested or will vest (A) 30% on January 20, 2021, (B) 30% on January 20, 2022 and (C) 40% on January 20, 2023, contingent upon
continuous employment;
(ii) $2,068,495, and $207,879 respectively, relate to performance share units and related dividend rights granted
on January 17, 2019, which have an aggregate performance period that ended on December 31, 2021; however, the awards deemed earned were still deemed to be outstanding as of December 31, 2021, therefore a Change in Control
or termination due to death or Disability could accelerate the time at which the awards could be settled with the executive; and
(iii)
$1,034,248, and $103,940, respectively, relate to restricted stock units and related dividend rights granted on January 17, 2019, which are scheduled to vest January 17, 2022.
(b) Of the amount reported under each of the Change in Control Termination column and the Termination for Death or
Disability column:
(i) $1,094,480, and $33,731, respectively, relate to restricted stock units and related dividend rights granted
on January 16, 2020, which are scheduled to vest January 16, 2023;
(ii) $2,736,227, and $84,329, respectively, relate to
performance share units and related dividend rights granted on January 16, 2020, which have a performance period that will end on December 31, 2022;
(iii) $1,514,856, and $11,599, respectively, relate to restricted stock units and related dividend rights granted on January 19, 2021,
which are scheduled to vest January 19, 2024; and
(iv) $3,787,139, and $28,988, respectively, relate to performance share units and
related dividend rights granted on January 19, 2021, which have a performance period that will end on December 31, 2023.
|
(5) |
(a) Of the amount reported under each of the Change in Control column, Change in Control
Termination column and the Termination for Death or Disability column: |
(i) $2,194,080, and $509,460,
respectively, relate to restricted stock units awarded January 20, 2017 as a retention grant which vested or will vest (A) 30% on January 20, 2021, (B) 30% on January 20, 2022 and (C) 40% on January 20, 2023, contingent upon
continuous employment;
(ii) $2,068,495, and $207,879, respectively, relate to performance share units and related dividend rights granted
on January 17, 2019, which have an aggregate performance period that ended on December 31, 2021; however, the awards deemed earned were still deemed to be outstanding as of December 31, 2021, therefore a Change in Control
or termination due to death or Disability could accelerate the time at which the awards could be settled with the executive; and
(iii)
$1,034,248, and $103,940, respectively, relate to restricted stock units and related dividend rights granted on January 17, 2019, which are scheduled to vest January 17, 2022.
(b) Of the amount reported under each of the Change in Control Termination column and the Termination for Death or
Disability column:
(i) $1,094,480, and $33,731, respectively, relate to restricted stock units and related dividend rights granted
on January 16, 2020, which are scheduled to vest January 16, 2023;
(ii) $2,736,227, and $84,329, respectively, relate to
performance share units and related dividend rights granted on January 16, 2020, which have a performance period that will end on December 31, 2022;
(iii) $1,514,856, and $11,599, respectively, relate to restricted stock units and related dividend rights granted on January 19, 2021,
which are scheduled to vest January 19, 2024; and
41
(if) $3,787,139, and $28,998, respectively, relate to performance share units and related
dividend rights granted on January 19, 2021, which have a performance period that will end on December 31, 2023.
Director
Compensation
The following table sets forth the compensation earned by our non-employee
directors for 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Fees Earned or Paid in Cash |
|
|
Stock Awards (1) |
|
|
Total Compensation |
|
Paul W. Chung |
|
|
$ 206,250 |
|
|
|
$253,556 |
|
|
|
$441,806 |
|
Joe Bob Perkins |
|
|
115,000 |
|
|
|
153,633 |
|
|
|
268,633 |
|
Charles R. Crisp |
|
|
130,000 |
|
|
|
153,633 |
|
|
|
268,633 |
|
Ershel C. Redd Jr. |
|
|
115,000 |
|
|
|
153,633 |
|
|
|
268,633 |
|
Chris Tong |
|
|
115,000 |
|
|
|
153,633 |
|
|
|
268,633 |
|
Laura C. Fulton |
|
|
140,000 |
|
|
|
153,633 |
|
|
|
293,633 |
|
Waters S. Davis, IV |
|
|
135,000 |
|
|
|
153,633 |
|
|
|
288,633 |
|
Rene R. Joyce |
|
|
115,000 |
|
|
|
153,633 |
|
|
|
268,633 |
|
Robert B. Evans |
|
|
118,750 |
|
|
|
153,633 |
|
|
|
272,383 |
|
Beth A. Bowman |
|
|
126,250 |
|
|
|
153,633 |
|
|
|
279,883 |
|
James W. Whalen (2) |
|
|
115,000 |
|
|
|
110,631 |
|
|
|
225,631 |
|
Lindsey M. Cooksen |
|
|
115,000 |
|
|
|
153,633 |
|
|
|
268,633 |
|
(1) |
Amounts reported in the Stock Awards column represent the aggregate grant date fair value of
restricted shares of our common stock with a one-year vesting period awarded to the non-employee directors under our Stock Incentive Plan, computed in accordance with
FASB ASC Topic 718, disregarding the estimate of forfeitures. For a discussion of the assumptions and methodologies used to value the awards reported in this column, see the discussion contained in the Notes to Consolidated Financial Statements at
Note 24 Compensation Plans included in our Annual Report on Form 10-K for the year ended December 31, 2021. On January 19, 2021, each director serving at that time received 5,099 restricted
shares of our common stock, except for our Chairman of the Board who received 7,818 restricted shares of our common stock, in connection with their 2021 service on our Board of Directors, and the grant date fair value of each share of common stock
computed in accordance with FASB ASC Topic 718 was $30.13 . On March 10, 2021, Mr. Whalen received 3,684 additional shares of our common stock in connection with his 2020 service on our Board of Directors, which should have been granted in
2020 but which were not granted due to an oversight in 2020, and the grant date fair value of each share of common stock computed in accordance with FASB ASC Topic 718 was $30.03. Since the award was for granted for 2020 service, it was not subject
to vesting requirements. As of December 31, 2021, each of the directors who received an award on January 19, 2021 still held the outstanding restricted shares granted to them in 2021 (which was equal to 5,099 shares for everyone other than
Mr. Chung, who held 7,818 shares), and our non-employee directors did not hold any outstanding stock options. |
(2) |
Mr. Whalen retired, effective December 10, 2021. |
Narrative to Director Compensation Table
For 2021, the annual cash retainer for all non-employee directors was $115,000. The additional annual retainers for
(i) the Chairman of the Board was $80,000, (ii) the Chairman of the Audit Committee was $25,000, (ii) the Chairman of the Compensation Committee was $20,000 and (iii) each of the Chairman of the Nominating and Governance Committee,
the Chairman of the Risk Management Committee and the Chairman of the Sustainability Committee was $15,000. Payment of non-employee director retainers are made quarterly. All
non-employee directors are reimbursed for out-of-pocket expenses incurred in attending Board of Director and committee meetings.
A director who is also an employee receives no additional compensation for services as a director. Accordingly, Mr. Meloy has been omitted from the
table. Because Mr. Meloy is a named executive officer for 2021, the Summary Compensation Table reflects the total compensation he received for services performed for us and our affiliates.
Director Long-term Equity Incentives. We granted equity awards in January 2021 to our non-employee directors
serving at that time under the Stock Incentive Plan. Each of these directors received an award of 5,099 restricted shares of our common stock, except for our Chairman of the Board who received 7,818 restricted shares of our common stock, with a one-year
42
vesting period. These grants reflect our intent to provide our directors with a target value of approximately $150,000 in annual long-term incentive awards, except for the grant to our Chairman
of the Board which included an additional award with a target value of approximately $80,000. The awards are intended to align the long-term interests of our directors with those of our shareholders.
Changes for 2022
Director
Compensation. The Board of Directors did not make any changes to our non-employee director compensation program for 2022.
Pay Ratio Disclosures
As required by
Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total
compensation of our employees and the annual total compensation of Mr. Meloy, our Chief Executive Officer (our CEO).
For
2021, our last completed fiscal year:
|
|
|
The median of the annual total compensation of all employees of our company (other than the CEO) was $124,880,
|
|
|
|
The annual total compensation of Mr. Meloy was $14,691,940. |
|
|
|
Based on this information, for 2021 the ratio of the annual total compensation of our CEO to the median of the
annual total compensation of all employees (CEO Pay Ratio) was reasonably estimated to be 118 to 1. |
To calculate the CEO
Pay Ratio we must identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO. To these ends, we took the following steps:
|
|
|
We determined that, as of December 31, 2021, our employee population consisted of approximately 2,430
individuals. This population consisted of our full-time and part-time employees, as we do not have temporary or seasonal workers. |
|
|
|
We used a consistently applied compensation measure to identify our median employee of comparing the amount of
salary or wages, bonuses, company contributions under our 401(k) plan, and the grant date fair value of equity awards determined under FASB ASC Topic 718. We identified our median employee by consistently applying this compensation measure to all of
our employees included in our analysis. For individuals hired after January 1, 2021 that were included in the employee population, we calculated these compensation elements on an annualized basis. We did not make any cost of living adjustments
in identifying the median employee. |
|
|
|
We combined all of the elements of the median employees compensation for the 2021 year in accordance
with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $124,880. |
43
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The
Board of Directors believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The Companys Corporate Governance Guidelines cover the following principal
subjects:
|
|
|
Role and functions of the Board of Directors |
|
|
|
Qualifications and independence of directors |
|
|
|
Size of the Board of Directors and director selection process |
|
|
|
Meetings of non-employee directors |
|
|
|
Ethics and conflicts of interest (a copy of the current Code of Conduct is posted on the
Companys website at www.targaresources.com/investors/corporate-governance) |
|
|
|
Compensation of the Board of Directors |
|
|
|
Access to senior management and to independent advisors |
|
|
|
New director orientation |
The Corporate Governance Guidelines are posted on the Companys website at www.targaresources.com/investors/corporate-governance. The
Corporate Governance Guidelines will be reviewed periodically, and any proposed additions to or amendments of the Corporate Governance Guidelines will be presented to the Board of Directors for its approval.
The NYSE has adopted rules that require listed companies to adopt governance guidelines covering certain matters. The Company believes that
the Corporate Governance Guidelines comply with the NYSE rules.
Board Leadership
Mr. Chung has served as Chairman of the Board of the Companys Board of Directors since January 1, 2021 and served as Executive
Vice President and Senior Legal Advisor of the Company between March 1, 2020 and December 31, 2020. Mr. Meloy has served as Chief Executive Officer and as a director of the Company since March 1, 2020. Although the positions of
Chief Executive Officer and Chairman of the Board of Directors are held currently by different individuals, our bylaws allow the same individual to hold the position of Chief Executive Officer and Chairman of the Board of Directors.
To ensure a strong and independent board, all directors of the Company, other than Messrs. Chung, Meloy and Perkins, are independent. The non-management members of the Board of Directors regularly meet in executive session without the presence of the CEO or other members of management. In addition, the independent members of the Board of Directors
meet in executive session without the presence of the CEO or other members of management at least once annually. Mr. Chung is chair of meetings of the non-management directors and Mr. Crisp is chair
of meetings of the independent directors.
In his capacity as chair of the meetings of
non-management directors, Mr. Chung provides, in conjunction with the CEO, leadership and guidance to the Board of Directors. He also (i) establishes the agenda for each meeting of the
44
non-management directors and (ii) provides the Boards guidance and feedback to the CEO and the Companys management team. All directors are
encouraged to suggest the inclusion of agenda items or revisions to meeting materials, and any director is free to raise at any Board meeting items that are not on the agenda for that meeting.
Given the strong leadership of the Companys CEO, the effective counterbalancing role of the Chairman and a Board comprised of strong and
independent directors, the Board believes that, at the present time, the current structure of the Board best serves the interests of the Company and its stockholders.
Communications with the Board of Directors
Stockholders or other interested parties can contact any director (including Mr. Chung or Mr. Crisp), any committee of the Board of
Directors, or our non-management directors as a group, by writing to them at Targa Resources Corp., 811 Louisiana Street, Suite 2100, Houston, Texas 77002, Attention: Secretary. Comments or complaints relating
to the Companys accounting, internal accounting controls or auditing matters will also be referred to members of the Audit Committee. All such communications will be forwarded to the appropriate member(s) of the Board of Directors.
Director Independence
The
Companys standards for determining director independence require the assessment of directors independence each year. A director cannot be considered independent unless the Board of Directors affirmatively determines that he or she does
not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the
NYSE.
The Board of Directors has assessed the independence of each non-employee director and each
nominee for director under the Companys guidelines and the independence standards of the NYSE. The Board of Directors affirmatively determined that nine non-employee directors (Mses. Bowman, Cooksen and
Fulton and Messrs. Crisp, Davis, Evans, Joyce, Redd and Tong) are independent. Mr. Tong will not be standing for reelection and is retiring from the Board, effective as of the date of the Annual Meeting, and therefore will no longer be
considered an independent director or a member of the Board.
Financial Literacy of Audit Committee and Designation of Financial Experts
The Board of Directors evaluated the members of the Audit Committee in December 2010 for financial literacy and the attributes of a financial
expert as well as the Exchange Act independence requirements. The Board of Directors also evaluated new members of the Audit Committee in February 2013, March 2016, March 2019 and June 2020 for financial literacy. The Board of Directors determined
that each of the Audit Committee members is financially literate and that the Chairman of the Audit Committee, Ms. Fulton, is an audit committee financial expert as defined by the SEC.
Oversight of Risk Management
Except for
the responsibilities of the Audit Committee discussed below, the Board of Directors as a whole (including the committees of the Board of Directors) oversees the assessment of major risks of the Company and the management of such risks. For example,
the Board of Directors, including the committees of the Board of Directors:
|
|
|
reviews and approves the Companys annual business plan and capital budget and reviews with management on at
least a quarterly basis the Companys financial performance, including any variations from the annual business plan and capital budget; |
|
|
|
has established specific dollar limits on the commitment authority of members of senior management and requires
Board approval of the Companys capital expenditures and investments exceeding that authority; and |
|
|
|
monitors the Companys interest rate and commodity hedging activities. |
45
The Companys Audit Committee is responsible for overseeing the Companys
assessment and management of financial reporting and internal control risks, as well as other risks such as the credit risks associated with counterparty exposure and our cybersecurity efforts and measures. Management and the Companys external
auditors report regularly to the Audit Committee on those subjects. Given the strong leadership of the Companys CEO, the effective counterbalancing role of the Chairman and a Board comprised of strong and independent directors, the Board
believes that, at the present time, the current structure of the Board best serves the interests of the Company and its stockholders.
Attendance at
Annual Meetings
While there is no formal attendance policy, the Board of Directors encourages all directors to attend the annual
meetings of stockholders, if practicable. We anticipate that the majority of our directors will attend the Annual Meeting. Twelve of the thirteen directors serving at the time attended the annual meeting of stockholders in 2021.
46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of March 29, 2022 (unless otherwise indicated) held
by:
|
|
|
each person who beneficially owns more than 5% of our then outstanding shares of common stock;
|
|
|
|
each of our named executive officers; |
|
|
|
each of our directors; and |
|
|
|
all of our executive officers and directors as a group. |
The Company owns all of the outstanding Partnership common units of the Partnership. As of March 29, 2022, none of our directors or executive officers
owned any Series A Preferred Stock of the Company.
Beneficial ownership is determined under the rules of the SEC. In general, these rules attribute
beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities and include, among other things, securities that an individual has the right to acquire within 60 days.
Unless otherwise indicated, the stockholders identified in the table below have sole voting and investment power with respect to all securities shown as beneficially owned by them. Percentage ownership calculations for any security holder listed in
the table below are based on 228,267,051 shares of our common stock outstanding on March 29, 2022.
|
|
|
|
|
|
|
|
|
|
|
Targa Resources Corp. |
|
Name of Beneficial Owner (1) |
|
Common Stock
Beneficially Owned |
|
|
Percentage of Common Stock Beneficially Owned |
The Vanguard Group (2) |
|
|
23,791,081 |
|
|
|
10.40% |
|
BlackRock, Inc. (3) |
|
|
21,959,815 |
|
|
|
9.60% |
|
T. Rowe Price Associates, Inc. (4) |
|
|
12,277,357 |
|
|
|
5.37% |
|
Joe Bob Perkins (5) |
|
|
631,887 |
|
|
|
* |
|
Matthew J. Meloy |
|
|
164,065 |
|
|
|
* |
|
Jennifer R. Kneale |
|
|
78,364 |
|
|
|
* |
|
Patrick J. McDonie |
|
|
149,891 |
|
|
|
* |
|
D. Scott Pryor (6) |
|
|
101,233 |
|
|
|
* |
|
Robert M. Muraro |
|
|
107,216 |
|
|
|
* |
|
Paul W. Chung (7) |
|
|
599,445 |
|
|
|
* |
|
Rene R. Joyce (8) |
|
|
795,181 |
|
|
|
* |
|
Charles R. Crisp |
|
|
123,681 |
|
|
|
* |
|
Chris Tong (9) |
|
|
85,712 |
|
|
|
* |
|
Robert B. Evans (10) |
|
|
94,289 |
|
|
|
* |
|
Ershel C. Redd Jr. |
|
|
26,735 |
|
|
|
* |
|
Laura C. Fulton |
|
|
23,778 |
|
|
|
* |
|
Waters S. Davis, IV |
|
|
21,062 |
|
|
|
* |
|
Beth A. Bowman |
|
|
13,922 |
|
|
|
* |
|
Lindsey M. Cooksen |
|
|
5,673 |
|
|
|
* |
|
All directors and executive officers as a group (19 persons) |
|
|
2,506,007 |
|
|
|
1.10% |
|
(1) |
Unless otherwise indicated, the address for all beneficial owners in this table is 811 Louisiana, Suite 2100,
Houston, Texas 77002. |
(2) |
As reported on Schedule 13G/A as of December 31, 2021 and filed with the SEC on February 10, 2022, the
business address for The Vanguard Group is 100 Vanguard Blvd. Malvern, PA 19355. The Vanguard Group has shared voting power over 203,644 shares of common stock, sole dispositive power over 23,413,413 shares of common stock and shared dispositive
power over 377,668 shares of common stock. |
(3) |
As reported on Schedule 13G as of December 31, 2021 and filed with the SEC on February 4, 2022, the
business address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. BlackRock, Inc. has sole voting power over 19,923,965 shares of common stock and sole dispositive power over
21,959,815 shares of common stock. |
(4) |
As reported on Schedule 13G as of December 31, 2021 and filed with the SEC on February 14, 2022, the
business address for T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. T. Rowe Price Associates, Inc. has sole voting power over 2,694,893 shares of common stock and sole dispositive power over 12,277,357 shares of common
stock. |
47
(5) |
Shares of common stock beneficially owned by Mr. Perkins include: (i) 406,867 shares issued to the Perkins
Blue House Investments Limited Partnership (PBHILP) and (ii) 53,193 shares held by Mr. Perkins wife. Mr. Perkins is the sole member of JBP GP, L.L.C., one of the general partners of the PBHILP. |
(6) |
Shares of common stock beneficially owned by Mr. Pryor include 101,233 shares held by the Pryor Trust, of
which Mr. Pryor and his spouse serve as co-trustees. |
(7) |
Shares of common stock beneficially owned by Mr. Chung include: (i) 244,208 shares held by the Paul Chung
2008 Family Trust, of which Mr. Chung serves as trustee; and (ii) 244,209 shares held by the Helen Chung 2007 Family Trust, of which Mr. Chungs spouse and Mr. Chungs sister-in-law serve as co-trustees. |
(8) |
Shares of common stock beneficially owned by Mr. Joyce include: (i) 198,759 shares issued to The Rene Joyce
2010 Grantor Retained Annuity Trust, of which Mr. Joyce and his wife are co-trustees and have shared voting and investment power; and (ii) 371,292 shares issued to The Kay Joyce 2010 Family Trust, of
which Mr. Joyces wife is trustee and has sole voting and investment power. |
(9) |
Shares of common stock beneficially owned by Mr. Tong include 434 shares held by Mr. Tongs wife.
|
(10) |
Shares of common stock beneficially owned by Mr. Evans include 27,000 shares held by Mr. Evans
wife. |
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth certain information as of December 31, 2021 regarding our long-term incentive plans, under which our common stock is
authorized for issuance to employees, consultants and directors of us, the General Partner and their affiliates. Our sole equity compensation plan, under which we will make equity grants, is our Amended and Restated 2010 Stock Incentive Plan, which
was approved by our stockholders on May 22, 2017.
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Plan category
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Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights |
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Weighted average
exercise price of
outstanding options,
warrants and rights
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Number of securities
remaining available for future
issuance under equity
compensation plans (excluding
securities reflected in column
(a)) |
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(a) |
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(b) |
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(c) |
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Equity compensation plans approved by security holders (1) |
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- |
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- |
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6,104,978 |
(1) |
Generally, awards of restricted stock, restricted stock units and performance share units to our officers and
employees under the Stock Incentive Plan are subject to vesting over time as determined by the Compensation Committee and, prior to vesting, are subject to forfeiture. Stock incentive plan awards may vest in other circumstances, as approved by the
Compensation Committee and reflected in an award agreement. Restricted stock, restricted stock units and performance share units are issued, subject to vesting, on the date of grant. The Compensation Committee may provide that dividends on
restricted stock, restricted stock units or performance share units are subject to vesting and forfeiture provisions, in which case such dividends would be held, without interest, until they vest or are forfeited. |
TRANSACTIONS WITH RELATED PERSONS
Our
Relationship with Targa Resources Partners LP and its General Partner
Our operating assets are held by subsidiaries of the
Partnership and our interests in the Partnership consist of (i) a 2.0% general partner interest in the Partnership and (ii) all of the outstanding common units of the Partnership.
Reimbursement of Operating and General and Administrative Expense
During the year ended December 31, 2021, pursuant to the terms of the Partnerships partnership agreement (the partnership
agreement), the Partnership reimbursed us for all direct and indirect expenses, as well as expenses otherwise allocable to the Partnership in connection with the operation of the Partnerships business, incurred on the Partnerships
48
behalf, which included operating and direct expenses, including compensation and benefits of operating personnel, including 401(k), pension and health insurance benefits, and for the provision of
various general and administrative services for the Partnerships benefit. We perform centralized corporate functions for the Partnership, such as legal, accounting, treasury, insurance, risk management, health, safety and environmental,
information technology, human resources, credit, payroll, internal audit, taxes, engineering and marketing. The General Partner determines the amount of general and administrative expenses to be allocated to the Partnership in accordance with the
partnership agreement. Other than our direct costs of being a reporting company, so long as our operating assets are held by subsidiaries of the Partnership, substantially all of our general and administrative costs have been, and will continue to
be, allocated to the Partnership.
Competition
We are not restricted, under the Partnerships partnership agreement, from competing with the Partnership. We may acquire, construct or dispose of
additional midstream energy or other assets in the future without any obligation to offer the Partnership the opportunity to purchase or construct those assets.
Contracts with Affiliates
Indemnification
Agreements with Directors and Officers
We have entered into indemnification agreements with each of our directors and officers,
including directors and officers who serve or served as directors and/or officers of the General Partner. Each indemnification agreement provides that we will indemnify and hold harmless each indemnitee for Expenses (as defined in the
indemnification agreement) to the fullest extent permitted or authorized by law, including the Delaware General Corporation Law, in effect on the date of the agreement or as it may be amended to provide more advantageous rights to the indemnitee. If
such indemnification is unavailable as a result of a court decision and if we and the indemnitee are jointly liable in the proceeding, we will contribute funds to the indemnitee for his or her Expenses in proportion to relative benefit and fault of
us and indemnitee in the transaction giving rise to the proceeding.
Each indemnification agreement also provides that we will indemnify
the indemnitee for monetary damages for actions taken as our director or officer or for serving at our request as a director or officer or another position at another corporation or enterprise, as the case may be but only if (i) the indemnitee
acted in good faith and, in the case of conduct in his or her official capacity, in a manner he or she reasonably believed to be in our best interests and, in all other cases, not opposed to our best interests and (ii) in the case of a criminal
proceeding, the indemnitee must have had no reasonable cause to believe that his or her conduct was unlawful. The indemnification agreement also provides that we must advance payment of certain Expenses to the indemnitee, including fees of counsel,
subject to receipt of an undertaking from the indemnitee to return such advance if it is ultimately determined that the indemnitee is not entitled to indemnification.
Transactions with Related Persons
Relationship
with Sajet Resources LLC
In December 2010, immediately prior to Targas initial public offering, Sajet Resources LLC
(Sajet) was spun-off from Targa. At the time, certain directors and officers of Targa were directors and officers of Sajet. The current directors of Sajet are Matthew J. Meloy, Jennifer R. Kneale,
Regina L. Gregory, who are also executive officers of Targa, and Scott Rogan. The current executive officers of Sajet are Matthew J. Meloy, Robert M. Muraro, Jennifer R. Kneale, Regina L. Gregory and Julie H. Boushka, who are also executive officers
of Targa. The primary assets of Sajet are real property. Sajet also holds (i) an ownership interest in Floridian Natural Gas Storage Company, LLC through a December 2016 merger with Tesla Resources LLC and (ii) an ownership interest in
Allied CNG Ventures LLC. Former holders of our pre-IPO common equity, including certain of our current and former executives, managers and directors collectively own an 18% interest in Sajet. We hold three
outstanding promissory notes from Sajet in the principal amounts of $9.9 million, $0.5 million and $0.2 million. The interest rate on each of the promissory notes accrues at the prime rate plus six percent annum.
Since March 2018, Sajet has been accounted for on a consolidated basis in our consolidated financial statements.
49
Relationship with Southwest Energy LP
During the year ended December 31, 2021, Ershel C. Redd Jr., a director of Targa, had an immediate family member who was an officer and
part owner of Southwest Energy LP (Southwest Energy) from and to whom we purchase and sell natural gas and NGL products. During 2021, we made sales to Southwest Energy of $28,661,997 million and purchases of $26,558,606 million
from Southwest Energy. Mr. Redds immediate family member retired from his role as an officer of Southwest Energy in January 2021.
Relationship with Intercontinental Exchange, Inc.
Jennifer R. Kneale, Chief Financial Officer of Targa and of the Partnerships general partner, has an immediate family member who is an
officer of ICE Group. During 2021, we made sales to ICE Group of $31,325,292 million and purchases from ICE Group of $26,558,606 million.
These transactions were at market prices consistent with similar transactions with other nonaffiliated entities.
Review, Approval or Ratification of Transactions with Related Persons
Our policies and procedures for approval or ratification of transactions with related persons are not contained in a single policy
or procedure. Instead, they are reflected in the general operation of our Board of Directors, consistent with past practice. We distribute and review a questionnaire to our executive officers and directors requesting information regarding, among
other things, certain transactions with us in which they or their family members have an interest. Pursuant to our Code of Conduct, our officers and directors are required to avoid any activity or interest that creates a conflict of interest between
them and us or any of our subsidiaries, unless the conflict is disclosed and pre-approved by our Board of Directors.
Director Independence
Mses. Bowman, Cooksen and Fulton
and Messrs. Crisp, Davis, Evans, Joyce, Redd and Tong are our independent directors under the NYSEs listing standards. Mr. Tong will not be standing for reelection and is retiring from the Board, effective as of the date of the Annual
Meeting, and therefore will no longer be an independent director or a member of the Board. Our Board of Directors examined the commercial relationships between us and companies for whom our independent directors serve as directors or with whom
family members of our independent directors have an employment relationship. The commercial relationships reviewed consisted of product and services purchases and product sales at market prices consistent with similar arrangements with unrelated
entities.
Report of the Audit Committee
The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. Management has the primary responsibility
for the financial statements and the reporting process including the systems of internal controls. The Audit Committee operates under a written charter approved by the Board of Directors. The charter, among other things, provides that the Audit
Committee has authority to appoint, retain and oversee the independent auditor and is available on our website at www.targaresources.com/investors/corporate-governance. At the time of the filing of our Annual Report on Form 10-K for the year ended December 31, 2021, Mses. Cooksen and Fulton and Mr. Evans were the members of our Audit Committee.
In this context, the Audit Committee:
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reviewed and discussed the audited financial statements in our Annual Report on Form 10-K with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial
statements; |
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reviewed with PricewaterhouseCoopers LLP, our independent auditors, who are responsible for expressing an opinion
on the conformity of the audited financial statements with generally accepted accounting principles, their judgments as to the quality and acceptability of our accounting principles and such other matters as are required to be discussed with the
Audit Committee under generally accepted auditing standards; |
50
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received the written disclosures and the letter required by applicable requirements of the Public Company
Accounting Oversight Board regarding PricewaterhouseCoopers LLPs communications with the Audit Committee concerning independence from the Company and its subsidiaries, and has discussed with PricewaterhouseCoopers LLP the firms
independence; |
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discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the accounting standards as
adopted by the Public Company Accounting Oversight Board; |
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discussed with the Companys internal auditors and PricewaterhouseCoopers LLP the overall scope and plans
for their respective audits. The Audit Committee meets with the internal auditors and PricewaterhouseCoopers LLP, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls and the
overall quality of our financial reporting; |
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based on the foregoing reviews and discussions, recommended to the Board of Directors that the audited financial
statements be included in our Annual Report on Form 10-K for the year ended December 31, 2021, for filing with the SEC; and |
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approved the selection and appointment of PricewaterhouseCoopers LLP to serve as our independent auditors.
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This report has been furnished by the members of the Audit Committee of the Board of Directors:
Audit Committee
Laura
C. Fulton, Chairman
Lindsey M. Cooksen
Robert B. Evans
The report of
the Audit Committee in this report shall not be deemed incorporated by reference into any other filing by Targa Resources Corp. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.
51
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP as the independent auditors of the Company for 2022.
PricewaterhouseCoopers LLP has audited the Companys consolidated financial statements since 2005. The 2021 audit of the Companys annual consolidated financial statements was completed on February 24, 2022.
The Board of Directors is submitting the selection of PricewaterhouseCoopers LLP for ratification at the Annual Meeting. The submission of
this matter for approval by stockholders is not legally required, but the Board of Directors and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board of Directors and
the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the selection of PricewaterhouseCoopers LLP, the Audit Committee will reconsider the selection of that firm as the Companys auditors.
The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Companys auditors. The
stockholders ratification of the selection of PricewaterhouseCoopers LLP does not limit the authority of the Audit Committee to change auditors at any time.
Audit and Other Fees
The Audit
Committee has approved the use of PricewaterhouseCoopers LLP as our independent principal accountant. All services provided by our independent principal accountant are subject to pre-approval by the Audit
Committee. The Audit Committee is informed of each engagement of the independent principal accountant to provide services to us.
We have
engaged PricewaterhouseCoopers LLP as our independent principal accountant. The following table summarizes fees we were billed by PricewaterhouseCoopers LLP for independent auditing, tax and related services for each of the last two fiscal years:
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2021 |
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2020 |
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(In millions) |
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Audit fees (1) |
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$ |
3.9 |
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$ |
4.4 |
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Audit-related fees (2) |
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Tax fees (3) |
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All other fees (4) |
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0.2 |
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$ |
3.9 |
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$ |
4.6 |
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(1) |
Audit fees represent amounts billed for each of the years presented for professional services rendered in
connection with (i) the integrated audit of our annual financial statements and internal control over financial reporting, (ii) the review of our quarterly financial statements or (iii) those services normally provided in connection
with statutory and regulatory filings or engagements including comfort letters, consents and other services related to SEC matters. This information is presented as of the latest practicable date for this proxy statement. |
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(2) |
Audit-related fees represent amounts we were billed in each of the years presented for assurance and related
services that are reasonably related to the performance of the annual audit or quarterly reviews of our financial statements and are not reported under audit fees. |
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(3) |
Tax fees represent amounts we were billed in each of the years presented for professional services rendered in
connection with tax compliance. |
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(4) |
All other fees represent amounts we were billed in each of the years presented for services not classifiable
under the other categories listed in the table above. |
The Company expects that representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting to respond to appropriate questions and to make a statement if they desire to do so.
52
Vote Required
The affirmative vote of a majority of the shares present and entitled to be voted on the proposal on the record date for determining
stockholders entitled to vote at the 2022 Annual Meeting is required for approval of Proposal Two. Brokers have discretionary authority in the absence of timely instructions from you to vote on this proposal. Please see Quorum and
VotingVote Required for further information regarding the impact of abstentions and broker non-votes.
Recommendation of our Board of Directors
The Board of Directors unanimously recommends that stockholders vote FOR the ratification of the selection of PricewaterhouseCoopers LLP
as the independent auditors of the Company for 2022.
53
PROPOSAL THREE
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Introduction
We are asking our
stockholders to provide advisory, non-binding approval of the compensation paid to our named executive officers, as described in the Executive Compensation section of this proxy statement,
beginning on page 32. Our Board of Directors recognizes that executive compensation is an important matter for our stockholders. As described in detail in the CD&A section of this proxy statement, the Compensation Committee is tasked with the
implementation of our executive compensation philosophy, and the core of that philosophy is to pay our executives based on performance. In particular, the Compensation Committee strives to attract, retain and motivate exceptional executives, to
reward past performance measured against established goals and provide incentives for future performance, and to align executives long-term interests with the interests of our stockholders. To do so, the Compensation Committee uses a
combination of short- and long-term incentive compensation to reward near-term excellent performance and to encourage executives commitment to our long-range, strategic business goals. It is the intention of the Compensation Committee that our
executive officers be compensated competitively and consistently with our strategy, sound corporate governance principles, other companies in the same and closely related industries, and stockholder interests and concerns.
As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests
of our stockholders and that the total compensation package provided to our named executive officers (including potential payouts upon a termination or change in control) are reasonable and not excessive. As you consider this Proposal Three, we urge
you to read the CD&A section of this proxy statement for additional details on executive compensation, including information about our compensation philosophy and objectives and the past compensation of our named executive officers, and to
review the tabular disclosures regarding named executive officer compensation together with the accompanying narrative disclosures in the Executive Compensation section of this proxy statement. Among the program features incorporated by
the Compensation Committee to align with our executive compensation philosophy are the following:
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annual base salary, which is annual fixed-cash compensation that is a critical factor in attracting and retaining
qualified talent; |
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annual variable incentive bonus awards, paid in the form of cash, tied to the achievement of key financial,
operational and strategic objectives based on a rigorous, holistic evaluation of performance, ultimately subject to the Compensation Committees business judgement; and |
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a combination of restricted stock unit awards and performance share unit awards under our stock incentive plan to
promote alignment with our stockholders by tying a majority of our executive officers compensation to creation of long-term value and by encouraging executives to build meaningful equity ownership stakes. |
Section 14A of the Exchange Act requires, among other things, that we provide stockholders with the opportunity to vote to approve, on an
advisory basis, our named executive officers compensation as disclosed in this proxy statement in accordance with the rules of the SEC. This vote is not intended to address any specific item of compensation, but rather the overall compensation
of our named executive officers and the philosophy, policies and practices described in this proxy statement.
As an advisory vote,
Proposal Three is not binding on our Board of Directors or the Compensation Committee, will not overrule any decisions made by our Board of Directors or the Compensation Committee, and will not require our Board of Directors or the Compensation
Committee to take any specific action. Although the vote is non-binding, our Board of Directors and the Compensation Committee value the opinions of our stockholders, and will carefully consider the outcome of
the vote when making future compensation decisions for our named executive officers. In particular, to the extent there is any significant vote against our named executive officers compensation as disclosed in this proxy statement, we will
consider our stockholders concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
54
We currently conduct annual advisory votes on executive compensation and expect to conduct
the next advisory vote at our next annual meeting of stockholders in 2023.
Text of the Resolution to be Adopted
We are asking stockholders to vote FOR the following resolution:
RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the named executive officers as
disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the CD&A, the 2021 Summary Compensation Table and the other related tables and disclosures.
Vote Required
The affirmative vote of a
majority of the shares present and entitled to be voted on the proposal on the record date for determining stockholders entitled to vote at the 2022 Annual Meeting is required for approval of Proposal Three. If you own shares through a bank, broker
or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. Please see Quorum and VotingVote Required
for further information regarding the impact of abstentions and broker non-votes.
Recommendation of our Board
of Directors
The Board of Directors unanimously recommends that stockholders vote FOR the approval of the compensation of our
named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC.
55
STOCKHOLDER PROPOSALS FOR 2023; IDENTIFICATION OF DIRECTOR CANDIDATES
Any stockholder of the Company who desires to submit a proposal for action at the 2023 annual meeting of Stockholders and wishes to have such
proposal (a Rule 14a-8 Proposal) included in the Companys proxy materials, must submit such Rule 14a-8 Proposal to the Company at its principal
executive offices no later than December 8, 2022, unless the Company notifies the stockholders otherwise. Only those Rule 14a-8 Proposals that are timely received by the Company and proper for stockholder
action (and otherwise proper) will be included in the Companys proxy materials.
Any stockholder of the Company who desires to
submit a proposal for action at the 2023 annual meeting of stockholders, but does not wish to have such proposal (a Non-Rule 14a-8 Proposal) included in the
Companys proxy materials, must submit such Non-Rule 14a-8 Proposal to the Company at its principal executive offices so that it is received between
January 24, 2023 and February 23, 2023, unless the Company notifies the stockholders otherwise.
Discretionary voting
authority is the ability to vote proxies that stockholders have executed and submitted to the Company, on matters not specifically reflected in the Companys proxy materials, and on which stockholders have not had an opportunity to vote
by proxy.
It is the responsibility of the Nominating and Governance Committee to identify, evaluate and recommend to the Board of
Directors nominees for election at the annual meeting of stockholders, as well as to fill vacancies or additions on the Board of Directors that may occur between annual meetings. When recommending director candidates, the Nominating and Governance
Committee considers and reviews each candidates relevant skills and experience, business judgment, service on boards of directors of other companies, personal and professional integrity, including commitment to the Companys core values,
openness and ability to work as part of a team, the overall variety and mix of experience, skills, attributes and viewpoints of the Board of Directors, taken as a whole, willingness to commit the required time to serve as a board member and
familiarity with the Company and its industry.
Although the Nominating and Governance Committee does not have a formal policy with
respect to diversity, the Committee considers the diversity of, and the optimal enhancement of the current mix of talent and experience on the Board of Directors and endeavors to achieve an overall balance of diversity of experiences, skills,
attributes and viewpoints. The Nominating and Governance Committee believes it has achieved that balance through the representation on the Board of Directors of members having experience in various sectors of the energy industry, finance, accounting
and investment analysis, among other areas. The Nominating and Governance Committee does not discriminate based upon race, religion, sex, national origin, age, disability, citizenship or any other legally protected status.
In identifying potential director candidates, the Nominating and Governance Committee relies on any source available for the identification
and recommendation of candidates, including current directors and officers and stockholders. In addition, the Nominating and Governance Committee from time to time may engage a third party search firm to identify or evaluate, or assist in
identifying or evaluating potential candidates, for which the third party search firm will be paid a fee.
The Nominating and Governance
Committee will also consider any nominee recommended by stockholders for election at the annual meeting of stockholders to be held in 2023 if that nomination is submitted in writing, between January 24, 2023 and February 23, 2023, to Targa
Resources Corp., 811 Louisiana Street, Suite 2100, Houston, Texas 77002, Attention: Secretary. The Nominating and Governance Committee treats recommendations for directors that are received from the Companys stockholders equally with
recommendations received from any other source. With respect to each such nominee, the following information must be provided to the Company with the written nomination:
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a) |
the nominees name, address and other personal information; |
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b) |
the number of shares of each class and series of stock of the Company held by such nominee;
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c) |
the nominating stockholders name, residential address and telephone number, and business address and
telephone number; and |
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d) |
all other information required to be disclosed pursuant to Regulation 14A of the Securities and Exchange Act of
1934. |
56
Each submission must also include a statement of the qualifications of the nominee, a
notarized consent signed by the nominee evidencing a willingness to serve as a director, if elected, and a written representation and agreement that such person (i) is not and will not become a party to any voting agreement or compensation
agreement that has not been disclosed to the Company or that could limit or interfere with the nominees ability to comply with their fiduciary duties under applicable law and (ii) will comply with all of the Companys applicable
corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines.
Written requests for
inclusion of any stockholder proposal should be addressed to Targa Resources Corp., 811 Louisiana Street, Suite 2100, Houston, Texas 77002, Attention: Secretary. The Company suggests that any such proposal be sent by certified mail, return receipt
requested.
SOLICITATION OF PROXIES
Solicitation of Proxies may be made by internet, mail, personal interview or telephone by officers, directors and regular employees of the
Company. The Company may also request banking institutions, brokerage firms, custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of the common stock that those companies or persons hold of record, and the
Company will reimburse the forwarding expenses. In addition, the Company has retained Alliance Advisors, LLC to assist in solicitation for an initial fee of $19,000 and the reimbursement of out-of-pocket expenses. The Company will bear all costs of solicitation.
STOCKHOLDER LIST
In accordance with the Delaware General Corporation Law, the Company will maintain at its corporate offices in Houston, Texas, a list
of the stockholders entitled to vote at the Annual Meeting. The list will be open to the examination of any stockholder, for purposes germane to the Annual Meeting, during ordinary business hours for ten days before the Annual Meeting and at the
Annual Meeting.
PROXY MATERIALS, ANNUAL REPORT AND OTHER INFORMATION
The Companys Annual Report on Form 10-K for the year ended December 31, 2021 is being made
available to stockholders concurrently with this proxy statement and does not form part of the proxy solicitation material.
A copy of
the Companys Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, will be sent to any stockholder without charge upon written request. One copy of the Notice, this
proxy statement and our Annual Report on Form 10-K (the Proxy Materials) will be sent to stockholders who share an address, unless they have notified the Company that they want to continue
receiving multiple packages. A copy of the Proxy Materials will also be promptly sent upon written or oral request to any stockholder of a shared address to which a single copy of the Proxy Materials was delivered. If two or more stockholders with a
shared address are currently receiving only one copy of the Proxy Materials, then the stockholders may request to receive multiple packages in the future, or if a stockholder is currently receiving multiple packages of the Proxy Materials, then the
stockholder may request to receive a single copy in the future. Such requests may be made by writing to Investor Relations, Targa Resources Corp., 811 Louisiana Street, Suite 2100, Houston, Texas 77002 or by calling (713) 584-1133. The Companys Annual Report on Form 10-K is also available at the SECs website in its EDGAR database at www.sec.gov.
57
INTERNET AND PHONE VOTING
For shares of stock that are registered in your name, you may vote by internet or phone using procedures provided by Alliance Advisors, LLC.
Votes submitted by internet or phone must be received by 11:59 p.m., Central Time, on May 23, 2022. The giving of such a proxy will not affect your right to vote in person should you decide to attend the Annual Meeting.
The internet and phone voting procedures are designed to authenticate stockholder identities, to allow stockholders to give their voting
instructions and to confirm that stockholders instructions have been recorded properly. Stockholders voting by internet should remember that the stockholder must bear costs associated with electronic access, such as usage charges from internet
access providers and telephone companies.
For shares of stock that are registered in a street name (the stockholder owns shares in the
name of a bank, broker or other holder of record on the books of the Companys transfer agent), you will receive instructions with your proxy materials that you must follow in order to have your shares voted. Please review your proxy card or
voting instruction card to determine whether you can vote by phone or electronically.
******
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO VOTE BY
INTERNET, BY PHONE OR IF YOU HAVE RECEIVED PAPER COPIES OF THE PROXY MATERIALS, BY COMPLETING, SIGNING AND RETURNING THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.
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By Order of the Board of Directors, |
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Regina L. Gregory |
Secretary |
Houston, Texas
March 31, 2022
58
Appendix A
Non-GAAP Financial Measures
This proxy statement includes the Companys non-GAAP financial measures: Adjusted EBITDA, adjusted free cash flow
and distributable cash flow.
We utilize non-GAAP measures to analyze our performance. The GAAP measure most
directly comparable to these non-GAAP measures are income (loss) from operations, net income (loss) attributable to the Company and segment operating margin. These
non-GAAP measures should not be considered as an alternative to GAAP measures and have important limitations as analytical tools. Investors should not consider these measures in isolation or as a substitute
for analysis of our results as reported under GAAP. Additionally, because our non-GAAP measures exclude some, but not all, items that affect income and segment operating margin, and are defined differently by
different companies within our industry, our definitions may not be comparable with similarly titled measures of other companies, thereby diminishing their utility. Management compensates for the limitations of our
non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these insights into our decision-making processes.
Adjusted EBITDA
We define adjusted EBITDA as net income
(loss) attributable to the Company before interest, income taxes, depreciation and amortization, and other items that we believe should be adjusted consistent with our core operating performance. The adjusting items are detailed in the adjusted
EBITDA reconciliation table and its footnotes. Adjusted EBITDA is used as a supplemental financial measure by us and by external users of our financial statements such as investors, commercial banks and others to measure the ability of our assets to
generate cash sufficient to pay interest costs, support our indebtedness and pay dividends to our investors.
Distributable Cash Flow and Adjusted Free
Cash Flow
We define distributable cash flow as adjusted EBITDA less distributions to TRP preferred limited partners, cash interest expense on debt
obligations, cash tax (expense) benefit and maintenance capital expenditures (net of any reimbursements of project costs). The Preferred Units that were issued by the Partnership in October 2015 were redeemed in December 2020. We define adjusted
free cash flow as distributable cash flow less growth capital expenditures, net of contributions from noncontrolling interest and net contributions to investments in unconsolidated affiliates. Distributable cash flow and adjusted free cash flow are
performance measures used by us and by external users of our financial statements, such as investors, commercial banks and research analysts, to assess our ability to generate cash earnings (after servicing our debt and funding capital expenditures)
to be used for corporate purposes, such as payment of dividends, retirement of debt or redemption of other financing arrangements.
Reconciliation
The following tables reconcile the non-GAAP financial measures used by management to the most directly
comparable GAAP measures for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2021
|
|
|
2020
|
|
|
|
(In millions) |
|
Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Flow |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Targa Resources Corp. |
|
$ |
71.2 |
|
|
$ |
(1,553.9 |
) |
Income attributable to TRP preferred limited partners |
|
|
|
|
|
|
15.1 |
|
Interest (income) expense, net |
|
|
387.9 |
|
|
|
391.3 |
|
Income tax expense (benefit) |
|
|
14.8 |
|
|
|
(248.1 |
) |
Depreciation and amortization expense |
|
|
870.6 |
|
|
|
865.1 |
|
Impairment of long-lived assets |
|
|
452.3 |
|
|
|
2,442.8 |
|
(Gain) loss on sale or disposition of business and assets |
|
|
2.0 |
|
|
|
58.4 |
|
Write-down of assets |
|
|
10.3 |
|
|
|
55.6 |
|
(Gain) loss from financing activities (1) |
|
|
16.6 |
|
|
|
(45.6 |
) |
Equity (earnings) loss |
|
|
23.9 |
|
|
|
(72.6 |
) |
Distributions from unconsolidated affiliates and preferred partner interests, net |
|
|
116.5 |
|
|
|
108.6 |
|
Change in contingent considerations |
|
|
0.1 |
|
|
|
(0.3 |
) |
Compensation on equity grants |
|
|
59.2 |
|
|
|
66.2 |
|
Risk management activities |
|
|
116.0 |
|
|
|
(228.2 |
) |
Severance and related benefits (2) |
|
|
|
|
|
|
6.5 |
|
Noncontrolling interests adjustments (3) |
|
|
(89.4 |
) |
|
|
(224.3 |
) |
|
|
|
|
|
|
|
|
|
Targa Resources Corp. Adjusted EBITDA |
|
$ |
2,052.0 |
|
|
$ |
1,636.6 |
|
|
|
|
|
|
|
|
|
|
Distributions to TRP preferred limited partners |
|
|
|
|
|
|
(15.1 |
) |
Interest expense on debt obligations (4) |
|
|
(376.2 |
) |
|
|
(388.9 |
) |
Maintenance capital expenditures, net (5) |
|
|
(131.7 |
) |
|
|
(104.2 |
) |
Cash taxes |
|
|
(2.7 |
) |
|
|
44.4 |
|
|
|
|
|
|
|
|
|
|
Distributable Cash Flow |
|
$ |
1,541.4 |
|
|
$ |
1,172.8 |
|
|
|
|
|
|
|
|
|
|
Growth capital expenditures, net (5) |
|
|
(407.7 |
) |
|
|
(597.9 |
) |
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow |
|
$ |
1,133.7 |
|
|
$ |
574.9 |
|
|
|
|
|
|
|
|
|
|
(1) |
Gains or losses on debt repurchases or early debt extinguishments. |
(2) |
Represents one-time severance and related benefit expense related to
our cost reduction measures. |
(3) |
Noncontrolling interest portion of depreciation and amortization expense (including the effects of the
impairment of long-lived assets on non-controlling interests). |
(4) |
Excludes amortization of interest expense. |
(5) |
Represents capital expenditures, net of contributions from noncontrolling interests and includes net
contributions to investments in unconsolidated affiliates. |
Targa Resources Corp. 2022 Annual Meeting of Stockholders May 24, 2022 8:00 a.m. Central Time 811 Louisiana Street Suite 2100 Houston,
Texas 77002 This proxy is solicited by the Board of Directors The undersigned stockholder(s) of Targa Resources Corp. hereby acknowledge receipt of the Notice of Annual Meeting of Stockholders, the Proxy Statement for the 2022 Annual Meeting of
Stockholders and the Form 10-K for the fiscal year ended December 31, 2021 and hereby appoint Jennifer R. Kneale and Regina L. Gregory, or either of them, as proxies, each with the power of substitution, to represent and vote the shares of the
undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Targa Resources Corp. to be held on May 24, 2022 or at any postponement or adjournment thereof. The undersigned
hereby revokes all proxies previously given by the undersigned to vote at the Annual Meeting or any postponement or adjournment thereof. Should the undersigned be present and choose to vote at the Annual Meeting, and once the Corporate Secretary is
notified of the decision to terminate this proxy, then the power of the proxies will be terminated. The shares represented by this proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder(s). If no direction
is made, this proxy will be voted FOR all nominees listed in Item 1 and FOR Items 2 and 3. If any other matters come properly before the meeting, the person named in this proxy will vote in their discretion. Continued and to be signed on the reverse
side PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held May 24, 2022. The Proxy Statement is available at
http://www.viewproxy.com/Targa/2022
Please mark your votes like this The Board of Directors Recommends a vote FOR each of the nominees listed in Item 1 and FOR Items 2 and
3. 1. To elect the three Class III Directors named in this proxy statement, each to serve until the 2025 annual meeting of stockholders: FOR AGAINST ABSTAIN 01 Waters S. Davis, IV 02 Rene R. Joyce 03 Matthew J. Meloy 2. To ratify the selection of
PricewaterhouseCoopers LLP as the Companys independent auditors for 2022. FOR AGAINST ABSTAIN 3. To approve, on an advisory basis, the compensation of the Companys named executive officers for the fiscal year ended December 31, 2021. FOR
AGAINST ABSTAIN Date Signature Signature Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. DO
NOT PRINT IN THIS AREA (Shareholder Name & Address Data) Address Change: (If you noted any Address Changes above, please mark box.) Please indicate if you plan to attend this meeting CONTROL NUMBER PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN
THE ENVELOPE PROVIDED. TARGA RESOURCES CORP. As a shareholder of Targa Resources Corp., you have the option of voting your shares electronically through the Internet or on the telephone, eliminating the need to return the proxy card. Your electronic
vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet or by telephone must be received by 11:59 p.m., CT on May 23,
2022. SCAN TO VIEW MATERIALS & VOTE CONTROL NUMBER PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone INTERNET Vote Your Proxy on the Internet: Go to www.AALVote.com/TRGP Have your proxy
card available when you access the above website. Follow the prompts to vote your shares. TELEPHONE Vote Your Proxy by Phone: Call 1 (866) 804-9616 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow
the voting instructions to vote your shares. MAIL Vote Your Proxy by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. If you vote your proxy by Internet or by Telephone, you do NOT need
to mail back your Proxy Card.
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