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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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The Williams Companies, Inc.
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LOGO

We Make Clean

Energy Happen

2021 Proxy Statement | The Williams Companies, Inc.

 

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LOGO

OUR MISSION

Williams is committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy.

OUR CORE VALUES

are engrained in how we do our work every day on behalf of our stakeholders.

AT WILLIAMS, WE ARE:

 

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WILLIAMS 2021 PROXY STATEMENT          

 


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LOGO

 MARCH 18, 2021

 DEAR FELLOW WILLIAMS STOCKHOLDER:

 

As Chairman of the Williams Board of Directors, I am pleased to report that, in a year filled with uncertainty, Williams was able to ensure the safe and reliable delivery of energy across America thanks to our dedicated workforce and best-in-class natural gas infrastructure.

Since the founding of our company, more than 100 years ago, Williams has embraced a culture of doing what is right, a concept that is today synonymous with sustainability. In that spirit, Williams is leading the industry with transparency on environmental, social, and governance (ESG) matters as well as investments in technology to accelerate the company’s journey to net zero carbon emissions by 2050. The company is also embarking on a broader clean energy strategy that is centered on the economic and environmental benefits of natural gas and its ability to reduce emissions in a pragmatic and cost-effective way.

Despite all the headwinds our industry faced in 2020, Williams performed exceptionally well and achieved another year of records. Highlights include:

 

    Record adjusted EBITDA of $5.1 billion

 

    Record distributable cash flow of $3.4 billion

 

    Record gathered volumes

 

    Record contracted transmission capacity

 

    Early in-service capacity for critical, clean energy projects

 

    Improved credit metrics and ESG scores

Looking ahead, it is my pleasure to invite you to join us for The Williams Companies, Inc. 2021 Annual Meeting of Stockholders, which will be webcast on Tuesday, April 27, 2021, at 2:00 p.m., Central Daylight Time. Due to public health concerns arising from the coronavirus pandemic, the annual meeting will be conducted in a virtual-only format; information regarding attending the virtual annual meeting can be found in the proxy statement. Details about the annual meeting, nominees for election to the Board of Directors and other matters to be acted on at the annual meeting are presented in the notice of annual meeting and proxy statement that follow.

Thank you for your continued support of Williams.

Sincerely,

 

LOGO

Stephen W. Bergstrom

Chairman of the Board

 

 

 

            LETTER TO STOCKHOLDERS

 

  


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WILLIAMS 2021 PROXY STATEMENT          

 


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DATE, TIME AND PLACE

 

Tuesday, April 27, 2021 at 2:00 p.m. CDT

 

Due to public health concerns arising from the coronavirus pandemic, this year’s annual meeting will be conducted online via live, audio webcast at www.meetingcenter.io/274167323. There will be no in-person meeting.

 

 

RECORD DATE

 

The record date is the close of business on March 1, 2021. Stockholders of record at such time are entitled to receive notice of and to participate and vote at the annual meeting or any adjournments or postponements thereof.

 

 

 

HOW TO ATTEND THE ANNUAL MEETING

 

To attend the annual meeting, access the Internet and go to the following site: www.meetingcenter.io/274167323.

 

 

 If you are (i) a stockholder of record or (ii) are a Beneficial Holder who has obtained a control number from Computershare (each of (i) and (ii) is “a Voting Eligible Party”), then select “I have a Control Number”, enter your control number located on the Notice of Internet Availability of Proxy Materials (the “Notice”) or your proxy card, and enter the meeting password WMB2021.

 

 

 If you are not a Voting Eligible Party, (i) select “I am a Guest”, enter your first and last name, and (ii) enter your email address.

 

 

AGENDA

 

 

At the annual meeting, you will be asked to:

 

 

1. Elect the 13 director nominees identified in the proxy statement;

 

 

2. Approve, on an advisory basis, the Company’s executive compensation;

 

 

3. Ratify the appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2021; and

 

 

4. Transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

 

 

 

        The Board unanimously recommends that you vote FOR each of the director nominees and FOR each of proposals 2 and 3 above.

 

 

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VOTING

 

We request that stockholders of record please promptly vote in one of the following ways so that your shares of common stock may be represented and voted at the annual meeting:

 

 Vote via the Internet at www.envisionreports.com/wmb;

 

 Call toll-free 1-800-652-VOTE (8683) in the United States or Canada;

 

 If you received a printed version of the proxy materials, mark, sign, date, and return the enclosed proxy card in the enclosed postage-paid envelope; or

 

 If you wish to vote during the virtual annual meeting, you may vote from within the meeting website by clicking on the “Cast Your Vote” link.

 

For further instructions on voting, please see the “Questions and Answers About the Annual Meeting and Voting” section of the proxy statement, refer to the Notice you received in the mail or, if you received a printed version of the proxy materials by mail, on the enclosed proxy card.

 

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on April 27, 2021: The proxy statement and our 2020 Annual Report, which includes a copy of our annual report on Form 10-K, are available at www.edocumentview.com/wmb.

 

Please refer to the proxy statement for more information, including a detailed explanation of the matters being submitted to a vote of the stockholders.

By Order of the Board of Directors,

 

LOGO

Robert E. Riley, Jr.

Corporate Secretary

March 18, 2021

 

 

 

  

 

      

 


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PROXY STATEMENT

We are providing this proxy statement as part of a solicitation by the Board of Directors (the “Board”) for use at our 2021 Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournment or postponement thereof. Due to public health concerns arising from the coronavirus pandemic, the Annual Meeting will be conducted online via live, audio webcast at www.meetingcenter.io/274167323 on Tuesday, April 27, 2021, at 2:00 p.m., Central Daylight Time. There will be no in-person meeting. We expect to mail to stockholders or otherwise make available this proxy statement and the accompanying proxy card beginning on March 18, 2021.

Unless the context otherwise requires, all references in this proxy statement to “Williams,” the “Company,” “we,” “us,” and “our” refer to The Williams Companies, Inc. and its consolidated subsidiaries.

 

PROXY STATEMENT SUMMARY      1  
CORPORATE GOVERNANCE AND BOARD MATTERS      3  

  Corporate Governance

     3  

  Environmental, Social and Governance (ESG) Matters

     8  

  Board and Committee Structure and Meetings

     11  
PROPOSAL 1: ELECTION OF DIRECTORS      17  

  Director Nominee Experience and Qualifications

     17  

  Director Nominee Matrix: Skills, Experience, and Attributes

     19  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      27  
COMPENSATION DISCUSSION AND ANALYSIS      29  

  Our Commitment to Pay for Performance

     29  

  2020 Business Overview

     31  

  Compensation Summary

     33  

– Objective of Our Compensation Programs

     33  

– Our Pay Philosophy

     34  

– Our Commitment to Pay for Performance

     35  

– 2020 Comparator Group

     35  

– Determining Our Comparator Group

     35  

– How We Use Our Comparator Group

     35  

– Our Pay Setting Process

     37  

– How We Determine the Amount for Each Type of Pay

     38  

– Base Pay

     38  

– Annual Cash Incentives

     38  

– Long-Term Incentives

     42  

– Benefits

     46  

– Additional Components of Our Executive Compensation Program

     47  

  Mitigating Risk

     48  

  Accounting and Tax Treatment

     49  
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT ON EXECUTIVE COMPENSATION      50  
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION      50  
EXECUTIVE COMPENSATION AND OTHER INFORMATION      51  

  2020 Summary Compensation Table

     51  

  Grants of Plan Based Awards

     53  

  Outstanding Equity Awards

     54  

  Option Exercises and Stock Vested

     55  

  Retirement Plan

     56  

– Pension Plan

     56  

– Retirement Restoration Plan

     56  

  Pension Benefits

     57  

  Nonqualified Deferred Compensation

     57  

  Change in Control Agreements

     57  

  Termination Scenarios

     60  
COMPENSATION OF DIRECTORS      62  

  Director Compensation for Fiscal Year 2020

     63  

  Outstanding Awards as of Fiscal Year End 2020

     64  
EQUITY COMPENSATION STOCK PLANS      65  

  Securities Authorized for Issuance Under Equity Compensation Plans

     65  
REPORT OF THE AUDIT COMMITTEE      66  
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION      67  
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS      68  
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING      69  
INCORPORATION BY REFERENCE      74  
WEBSITE ACCESS TO REPORTS AND OTHER INFORMATION      74  
APPENDIX: NON-GAAP MEASURES      A-1  
 
 

 

  

 

WILLIAMS 2021 PROXY STATEMENT      

 


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This summary highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider. Please read this entire proxy statement carefully before voting.

AGENDA AND VOTING RECOMMENDATIONS

 

LOGO

 

 

 

CORPORATE GOVERNANCE AND STRUCTURE

 

  12 of 13 director nominees, including all Audit Committee and Compensation and Management Development Committee members, are independent;

 

  4 of 13 director nominees are women;

 

  The Company has a “Rooney Rule” requiring the consideration of diverse director candidates for director vacancies and newly created directorships;

 

  The Chairman of the Board is independent of our Chief Executive Officer (“CEO”);

 

  Non-employee directors meet in executive session at each regularly scheduled Board meeting; and

 

  The Board conducts an annual strategy session to discuss long- term strategy, risks, and opportunities.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG)

 

  Our sustainability reports are available on www.williams.com;

 

  In August we announced our climate commitment, setting a near-term goal of a 56% absolute reduction from 2005 levels in company-wide greenhouse gas emissions by 2030 and putting us on a positive trajectory to be net zero carbon emissions by 2050;

 

  We have committed to the ONE Future 2025 methane intensity goals for industry sectors of 0.08% for Gathering and Boosting, 0.11% for Processing, and 0.31% for Transmission and Storage;

 

  Our Environmental, Health, and Safety Policy provides a safety framework for integrating safety performance into our core business activities;

 

  Our Code of Business Conduct is a comprehensive resource governing our ethical concerns and other matters; and

 

  Our scores amongst four of the most relevant and influential ESG ratings and rankings firms in 2020 reflected widespread recognition of our enhanced sustainability efforts.

COMPENSATION

 

  We pay for performance.

 

 

At target, at least 79% of our named executive officers’ (“NEOs”) compensation is variable based on the Company’s performance;

 

 

  At target, 88% of our Chief Executive Officer’s compensation is at risk;

 

  Our compensation programs are designed to reward officers and employees for strong operational and financial results aligned with our Company’s strategy; and

 

  Annual equity awards provide the most significant differentiation in pay and performance.
 

    

 

 

  

 

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CORPORATE GOVERNANCE

 

GENERAL

 

LOGO   Our Board believes that strong corporate governance is critical to achieving our performance goals and to maintaining the trust and confidence of investors, employees, customers, business partners,
regulatory agencies, and other stakeholders.

CORPORATE GOVERNANCE GUIDELINES

 

LOGO   Our Corporate Governance Guidelines provide a framework for the governance of Williams and address the operation, structure, and practice of the Board and its committees. The Corporate Governance Guidelines can be found in the Governance section
of our website. The Governance and Sustainability Committee reviews these guidelines at least annually and recommends changes to the Board, as necessary.

STRATEGIC PLANNING

 

LOGO   During the year, the Board meets with management to discuss and approve strategic plans, financial goals, capital spending, and other factors critical to successful performance. The Board also
reviews the Company’s long-term strategic planning at least annually and monitors the implementation of the Company’s strategic plan throughout the year. During Board meetings, directors review key issues and financial performance. In 2020, the Board met privately with the CEO and met in executive session at each regular Board meeting and additionally as required. Further, the CEO regularly communicates with the Board regarding the implementation of the Company’s strategic and financial plans.

BOARD/COMMITTEE/DIRECTOR EVALUATIONS

 

LOGO   The Board and each of its committees conduct annual evaluations and self-assessments. The results of those activities are made available to all directors. The evaluation process is
reviewed annually by the Governance and Sustainability Committee which considers general trends and feedback regarding the prior year’s evaluations. In addition, the Corporate Governance Guidelines and the Governance and Sustainability Committee Charter provide that individual directors will be evaluated, as necessary.

CHIEF EXECUTIVE OFFICER EVALUATION AND MANAGEMENT SUCCESSION

 

LOGO   The Board and the CEO annually discuss and collaborate to set the CEO’s performance goals and objectives. The Board annually meets in executive session to assess the CEO’s performance. The
Board, in conjunction with the Compensation and Management Development Committee, maintains a process for planning orderly succession for the CEO and other executive officer positions and oversees executive officer development.

BOARD LEADERSHIP STRUCTURE

 

LOGO   Pursuant to our By-laws and Corporate Governance Guidelines, the positions of Chairman of the Board and CEO may be held by the same or different persons. At this time, the Board believes that having an independent Chairman of the Board is the most
appropriate Board leadership structure. However, the Board has the flexibility to revise this structure based upon its periodic assessment and review of the Company’s needs and leadership. In this regard, Alan S. Armstrong serves as our President and CEO, and Stephen W. Bergstrom serves as our Chairman of the Board. The Board believes that having an independent Chairman aids in the Board’s oversight of management and promotes communications among the Board, the CEO, and other members of senior management. In addition, having a separate Chairman of the Board and CEO allows Mr. Armstrong to focus on his responsibilities in managing the Company.

The responsibilities of the Chairman of the Board include:

 

  presiding over Board meetings and executive sessions of the independent directors;

 

  overseeing the planning of the annual Board calendar and, in consultation with the CEO, scheduling and setting the Board and committee meeting agendas;

 

  overseeing the appropriate flow of information to the Board;

 

  acting as liaison between the independent directors and management;

 

  assisting the Chairs of the various Board committees in preparing agendas for committee meetings;

 

  chairing the Company’s annual meeting of stockholders; and

 

  performing other functions and responsibilities referred to in the Corporate Governance Guidelines or requested by the Board from time to time.
 

    

 

 

  

 

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BOARD OVERSIGHT OF WILLIAMS’ RISK MANAGEMENT PROCESSES

The Board has oversight responsibility regarding the assessment of the major risks inherent in our business. Accordingly, the Board reviews management’s efforts to address and mitigate risks, including strategic, regulatory, compliance, operational, financial, reputational, and cybersecurity risks, among others. The Board reviews risk in the context of discussions, question and answer sessions, and management reports at each regular Board meeting. The Board also evaluates the risks inherent in significant transactions. While the Board is ultimately responsible for risk oversight, the committees of the Board assist it in fulfilling its oversight responsibilities. The Board’s committees do so by considering the risks within their respective areas of expertise. For example:

 

  The Audit Committee oversees risks involving financial reporting and related internal controls. As part of this process, the Audit Committee meets periodically with management to review, discuss, and provide oversight with respect to our processes and controls, including controls to assess, monitor, manage, and mitigate potential significant risk exposures relating to the integrity of the Company’s financial statements and related compliance with legal and regulatory requirements. In providing such oversight, the Audit Committee may also discuss such processes and controls with our internal and independent auditors.

 

  The Compensation and Management Development Committee oversees risks associated with compensation program design including by reviewing whether there are risks that are reasonably likely to have a material adverse effect on us. Such committee also addresses risks relating to management development and retention.

 

  The Environmental, Health, and Safety Committee oversees risk management relating to environmental, health, and safety matters, including oversight of management’s safety-related policies and procedures.

 

  The Governance and Sustainability Committee considers structural governance and composition matters including recommending to the Board the allocation of oversight responsibilities to the Board committees.

At each regular Board meeting, the Board receives reports on significant committee activities. Certain risks, such as cybersecurity, are deemed to be of such importance to the Company that oversight is addressed by the full Board. In addition, risk management is incorporated in the Company’s annual strategic planning process, which is periodically reviewed by the Board. The Board also periodically reviews with management the Company’s insurance program and policies including its cyber insurance coverage.

Management also plays an important role in implementing the processes and procedures designed to mitigate risk and assisting the Board in the exercise of its oversight function. For example, we use a risk-based prioritization system, involving risk ranking and risk reduction estimates, in evaluating opportunities. This risk prioritization, as well as cost and other inputs, inform the proposed selection of opportunities proposed to the Board to be executed within a budget year. We also have a Chief Ethics and Compliance Officer who oversees our corporate ethics and compliance program (including Federal Energy Regulatory Commission compliance), our Code of Business Conduct training, and compliance with Company policies, standards, and procedures. Our Chief Ethics and Compliance Officer, or his delegee, and the General Counsel report, on an as needed basis, to the Audit Committee regarding Code of Business Conduct matters and calls to our ethics hotline related to accounting and auditing concerns. Such officers also report throughout the year to the Governance and Sustainability Committee regarding all other Code of Business Conduct concerns and calls to our ethics hotline. At least annually, our Chief Ethics and Compliance Officer, or his delegee, and our General Counsel meet with the Governance and Sustainability Committee to review the effectiveness of our corporate ethics and compliance program.

Management also periodically engages in a review of the critical risks to the Company and establishes and implements policies and procedures to address and mitigate such risks. For instance, we have a Chief Information Officer who assesses our information security and oversees our enterprise-wide cybersecurity risk management program. Such program includes, among other elements, mandatory cybersecurity training for our employees and third-parties who may have access to our systems, the maintaining of industrial control systems which meet or exceed industry cybersecurity standards, and the ongoing evaluation of the threat landscape. We engage external vendors including to conduct annual benchmark maturity assessments on our implementation of the NIST Cybersecurity Framework and for annual penetration testing of our information technology infrastructure. We also engage with various governmental entities, as needed, in conducting external program reviews of our information security controls.

The Chief Information Officer also, at least annually, meets with the Board to present a cybersecurity update, including an analysis of our cybersecurity risk management program’s strengths, weaknesses, opportunities, and cyber threats to the Company.

EXECUTIVE SESSIONS

OF NON-EMPLOYEE DIRECTORS

Non-employee directors meet without management present at each regularly scheduled Board meeting. Additional meetings may be called by the Chairman of the Board in his discretion or at the request of the Board.

 

    

    

 

 

 

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DIRECTOR INDEPENDENCE

Our Corporate Governance Guidelines require that all members of the Board, except our CEO, be “independent” directors as defined by the rules of the New York Stock Exchange (“NYSE”). Our Corporate Governance Guidelines also require that the Board annually determine whether our directors are independent. In evaluating independence, the NYSE’s rules require that the Board affirmatively determine that a director has no material relationship with the Company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company. Certain relationship and transactional standards, including specified dollar and percentage threshold amounts, are also set forth in the NYSE’s independence rules which, if exceeded, would disqualify a director from being independent. Prior to making a recommendation to the Board, our Governance and Sustainability Committee also considers relationships, which, while not constituting related party transactions in which a director had a direct or indirect material interest, nonetheless involved transactions between the Company and a company with which a director is affiliated, whether through employment status or by virtue of serving as a director. Included in the Governance and Sustainability Committee’s review were the following transactions, which occurred in the ordinary course of business. All matters described below fall below the relevant thresholds for independence as set forth in the NYSE’s rules:

 

   DIRECTOR

 

 

MATTERS CONSIDERED

 

  Nancy K. Buese

 

Ordinary course business transactions

with Newmont Mining Corporation

  Stephen I. Chazen

 

Ordinary course business transactions

with Occidental Petroleum Corporation

 

  Charles I. Cogut

 

Ordinary course business transactions

with Air Products & Chemicals, Inc.

 

  Vicki L. Fuller

 

Ordinary course business transactions

with Fidelity Investments, Inc.

 

  Peter A. Ragauss

 

Ordinary course business transactions

with Apache Corporation

 

  Rose M. Robeson

 

Ordinary course business transactions

with Newpark Resources

 

  William H. Spence

 

Ordinary course business transactions

with PPL Corporation

Based on the evaluations performed and recommendations made by the Governance and Sustainability Committee, in January 2021, the Board affirmatively determined that each of Mr. Bergstrom, Ms. Buese, Mr. Chazen, Mr. Cogut, Mr. Creel, Ms. Doré, Ms. Fuller, Mr. Ragauss, Ms. Robeson, Mr. Sheffield, Mr. Smith, and Mr. Spence are independent as defined by the NYSE’s rules.

Mr. Armstrong, our President and CEO, as well as a director, is not independent because of his role as an executive officer of the Company.

In addition to the NYSE’s independence requirements generally applicable to directors, all members of our Audit Committee and Compensation and Management Development Committee must meet heightened independence standards imposed by the NYSE and the Securities and Exchange Commission (“SEC”). Based on evaluations performed and recommendations made by the Governance and Sustainability Committee, in January 2021, the Board determined that all the members of our Audit Committee and Compensation and Management Development Committee satisfy the heightened independence requirements imposed by the NYSE and the SEC applicable to members of such committees.

 

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TRANSACTIONS WITH RELATED PERSONS

The Board has adopted written policies and procedures with respect to related person transactions. Any proposed related person transaction involving a director must be reviewed and approved by the full Board. The Governance and Sustainability Committee reviews proposed transactions with any other related persons, promoters, and certain control persons that would otherwise be required to be disclosed in our SEC filings. If convening a Governance and Sustainability Committee meeting before a related person transaction occurs is impractical, the committee Chair may review the transaction alone.

No director may participate in any review, consideration, or approval of any related person transaction with respect to which such director or any of his or her immediate family members is the related person. The Governance and Sustainability Committee or its Chair, or the Board, as the case may be, may approve, in good faith, only those related person transactions that are in, or not inconsistent with, the Company’s best interests and the best interests of our stockholders. In conducting a review of whether a transaction is in, or is not inconsistent with the Company’s best interests and those of our stockholders, the Governance and Sustainability Committee or its Chair, or the Board, as the case may be, will consider, among other things, the benefits of the transaction to the Company, the availability of other sources for comparable products or services, the terms of the transaction, the terms available to unrelated third-parties and to employees generally, and the nature of the relationship between the Company and the related party. There were no transactions that required review or approval by the Governance and Sustainability Committee, its Chair, or the full Board in 2020.

OUTSIDE BOARD SERVICE

Our Corporate Governance Guidelines limit the service of our directors on publicly held company boards and investment company boards to no more than four, including our Board, provided that, our CEO is limited to service on one non-affiliated public company board. Each of our directors is in compliance with our Corporate Governance Guidelines’ limitation.

MAJORITY VOTE STANDARD

The Board has a majority vote standard for the election of directors in uncontested elections. Each of our directors executed an irrevocable resignation that will become effective if he or she fails to receive a majority of the votes cast in an uncontested election and the Board accepts such resignation. If a director fails to receive the required votes for election, the Governance and Sustainability Committee will act on an expedited basis to determine whether to recommend acceptance of the resignation. The Governance and Sustainability Committee will then submit its recommendation for consideration by the Board. The Board will act on the recommendation, and publicly disclose its decision, within 90 days from the certification date of the election results. The Board expects the director whose tendered resignation is under consideration to abstain from participating in any decision regarding that resignation. The Governance and Sustainability Committee and the Board may consider any factors they deem relevant in deciding whether to make

such recommendation or to accept a director’s tendered resignation. If the Board accepts a director’s resignation, the Governance and Sustainability Committee will recommend to the Board whether to fill such vacancy or to reduce the size of the Board.

DIRECTOR ATTENDANCE AT ANNUAL

MEETING OF STOCKHOLDERS

We have a policy that all directors are expected to attend our annual meeting of stockholders. All Board members attended the 2020 Annual Meeting of Stockholders.

STOCKHOLDER ENGAGEMENT

We are committed to ongoing, constructive, and meaningful engagement with our stockholders. During 2020, members of our executive management team attended 17 investor conferences, engaged in four non-deal roadshows where they met with existing and potential stockholders, and hosted our annual analyst day. Presentations from these meetings and conferences are typically posted on the Investor page of our website. Our Board also periodically invites representatives of our large investors to present at our Board meetings where such representatives may share their perspectives on the Company and our industry. Investors occasionally travel to our headquarters and meet with our management. We also regularly engage with investors concerning environmental, social, and governance (“ESG”) matters. For example, in January 2021, our executive officer team presented, via webcast, our inaugural virtual ESG event. These various engagements allow us to receive feedback concerning our operational, financial, and strategic results, as well as ESG matters important to stockholders.

In addition, we host a quarterly earnings call during which our executive management team responds to analyst questions regarding both historical results and forward-looking information. Transcripts of our quarterly earnings calls, including the question and answer sessions, are posted to our website. In addition to the required reports which we file with the SEC, we make available on our website earnings analyst packages, investor presentations, and other reports with supplementary financial and operational information, including our sustainability report which contains ESG-related information. In addition to having a dedicated Investor Relations group which receives and responds to stockholder telephone calls and other communications, we also provide a means for stockholders to communicate directly with our Board, as provided under “Communications with Directors” below.

COMMUNICATIONS WITH DIRECTORS

Any stockholder or other interested party may communicate with our directors, individually or as a group, by contacting our Corporate Secretary or our Chairman of the Board. The contact information is maintained through the Investors page of our website at www.williams.com and is as follows:

 

The Williams Companies, Inc.    The Williams Companies, Inc.
One Williams Center, MD 49    One Williams Center, MD 47
Tulsa, Oklahoma 74172    Tulsa, Oklahoma 74172
Attn: Chairman of the Board    Attn: Corporate Secretary
 

    

    

 

 

 

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Communications will be forwarded to the relevant director(s) except for solicitations or other matters not related to the Company.

CODE OF ETHICS

Our Code of Business Conduct is applicable to all employees, including our CEO, Chief Financial Officer, and Chief Accounting Officer, as well as our directors.

HOW TO OBTAIN COPIES OF OUR GOVERNANCE-RELATED DOCUMENTS

The following documents are available through the Investors page of our website at www.williams.com:

 

    Corporate Governance Guidelines;

 

    Williams Code of Business Conduct; and

 

    Charters for the Audit Committee, the Compensation and Management Development Committee, the Governance and Sustainability Committee, and the Environmental, Health and Safety Committee.

If you prefer to receive printed copies of these documents, please send a written request to our Corporate Secretary at The Williams Companies, Inc., One Williams Center, MD 47, Tulsa, Oklahoma 74172.

PROHIBITION ON EMPLOYEE, OFFICER AND DIRECTOR HEDGING

As part of our Williams Policy on Securities Trading, we prohibit employees, including officers, and directors (“Covered Persons”) (i) from engaging in short sales of any Williams securities, or (ii) from engaging in hedging transactions or speculative transactions involving any Williams securities, including but not limited to option contracts, puts, calls, straddles, collars, hedges, swaps, forward contracts, exchange funds, or any transactions that hedge or offset, or are designed to hedge or offset, any decrease in

the market value of any Williams securities. Williams securities include, without limitation, common stock, debt, options for common stock, and any other derivative or non-derivative securities that Williams may issue from time to time, as well as derivative securities relating to the stock of Williams that are not issued by Williams or a subsidiary, such as exchange-traded put or call options, or swaps. Williams securities also include equity awards or stock options granted as compensation under any of Williams’ compensation or benefit plans. The restrictions in our Williams Policy on Securities Trading applicable to Covered Persons also apply to Covered Persons’ family members, others living in Covered Persons’ households, and entities that are directed by or subject to Covered Persons’ influence or control.

POLITICAL ADVOCACY AND CONTRIBUTIONS

We participate in the political process, including contributing to public policy discussions, through the lobbying efforts of our Government Affairs and Outreach department and trade associations. Political contributions that support the advancement of the company’s interests are also made with both corporate contributions and contributions from WILLCO PAC, Williams’ political action committee. WILLCO PAC is an independent, nonpartisan entity that raises voluntary contributions from eligible Williams employees to support candidates for congressional and state offices where permitted by law. The WILLCO PAC does not make contributions to Presidential candidates. Both WILLCO PAC’s giving and our corporate political giving include bipartisan contributions to federal and state campaign committees and candidates for elected office. For two consecutive years, Williams has been recognized as a Trendsetter Company in political disclosure practices and accountability by the CPA-Zicklin Index which benchmarks the political disclosure and accountability policies and practices for election-related spending of leading U.S. public companies. The Governance and Sustainability Committee annually reviews the Company’s political contributions.

 

 

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For more than a century, we have worked to make life better for our country, our partner communities, and our workforce by fueling the American dream. We continue to consider stakeholders in our everyday actions, and we approach issues surrounding sustainability with the mindset that, while our core competencies include the safe gathering and transportation of natural gas, our business is about people: our customers, our employees and our communities.

 

Goal: 56% absolute reduction in company-wide

greenhouse gas emissions by 2030

 

LOGO

 

COMMITMENT TO SUSTAINABILITY

 

 

During the last several years, we have significantly enhanced our ESG policies and practices including voluntarily increasing public disclosure of our environmental impact through our annual sustainability reports, which are available at www.williams.com, and filing with the CDP (formerly the Carbon Disclosure Project). We have a member of management who is dedicated to coordinating ESG activities and overseeing our internal ESG reporting teams. Oversight for the Company’s ESG efforts resides with the Board and its committees. In particular, the Governance and Sustainability Committee has oversight and guidance responsibility for ensuring that the Board, its respective committees, and management are devoting adequate attention to ESG matters. It accomplishes this task through assigning directors to committees where their experience can be most effectively utilized, by reviewing and developing committee charters, through Board and committee evaluations, and by receiving periodic management reports on ESG topics. The Governance and Sustainability Committee also recommends to the Board which committees should have oversight of specific responsibilities and other matters. In turn, the Board committees execute oversight for elements of the Company’s ESG program based upon their respective areas of expertise and responsibility. These responsibilities are described in detail elsewhere in this proxy statement.

 

 

Our ESG philosophy is to focus our efforts in areas that are significant to the long-term sustainability of our business. We believe this focus best serves all stakeholders, including stockholders, employees, and the communities where we do business. We use an external consulting firm to assist us with enterprise-wide materiality assessments and preparation of ESG reporting. During 2020, we continued utilizing internal steering and execution teams to focus on our sustainability reporting. The result of such teams’ efforts was the creation of our 2019 Sustainability Report which, along with our prior sustainability report, is available on our website. We expect to continue annually issuing updated sustainability reports. Among other matters, our 2019 Sustainability Report addresses matters relating to environmental stewardship (including climate change, methane reduction initiatives, and greenhouse gas emissions), safety, community engagement, and ethics and integrity. A description of certain facets of our ESG-related initiatives, programs, and actions follows on the next page.

 

 

For additional information about our ESG performance and related matters, please see our sustainability reports available

on our website www.williams.com, the contents of which are expressly not incorporated herein by reference.

 

 

 

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ENVIRONMENTAL, HEALTH & SAFETY

 

  Our Board-level Environmental, Health and Safety (“EH&S”) Committee is charged with oversight of EH&S matters and is committed to keeping Williams operating safely, reliably, and in a way that avoids, minimizes, and helps mitigate environmental impact.

 

  Our Williams Integrated Management System defines how we manage and reduce physical risk to our assets, the environment, and people.

 

  We have a Pipeline Integrity Management Plan that identifies additional safety procedures that we implement on liquid and gas transmission pipelines where a pipeline spill might have significant adverse impacts.

 

  In August we announced our climate commitment, setting a near-term goal of a 56% absolute reduction from 2005 levels in company-wide greenhouse gas emissions by 2030 and putting the company on a positive trajectory to be net zero carbon emissions by 2050.

 

 

By setting a near-term goal for 2030, we plan to leverage our natural gas-focused strategy and technology that is available today to focus on immediate opportunities to reduce emissions, scale renewables and build a clean energy economy — while looking forward and anticipating future innovations and technologies.

Corporate Sustainability Focus Areas

 

LOGO

 

Environmental,

Health & Safety

 

Williams takes an active role and focus on employee safety, maintaining strong ethical practices, and establishing healthful working conditions.

  

Social

 

We are committed to being a good corporate citizen and we strive to create better outcomes for our people, our customers, our employees, and our communities.

  

Governance

 

Strong corporate governance is embedded in our ESG strategy. We believe that good corporate governance is essential to the long-term success of the Company.

  
 

 

 

To reach our 2030 target, we are pursuing common sense methane emissions reduction opportunities through leak detection and repair, work practice improvements, and evaluating equipment upgrades on a site-specific basis.

 

 

Our long-term path to net zero by 2050 includes preparing for future breakthrough technologies in carbon capture, synthetic gas and hydrogen as a fuel source.

 

  We are a member of Our Nation’s Energy Future Coalition, Inc. (“ONE Future”) which has a collective membership target to reduce methane emissions in the natural gas supply chain to 1% by 2025. Williams has committed to the ONE Future 2025 methane intensity goals for industry sectors of 0.08% for Gathering and Boosting, 0.18% for Processing, and 0.31% for Transmission and Storage.

 

 

At the end of 2019 we were exceeding anticipated progress toward the ONE Future greenhouse gas reduction goal with methane emissions of 0.035% in Gathering and Boosting, 0.017% in Processing and 0.032% in Transmission and Storage.

KEY CLIMATE COMMITMENT DRIVERS

As a midstream industry leader, we believe we can successfully sustain and evolve our business as the world moves to a low carbon future, while also helping our customers and stakeholders meet their climate goals.

 

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   While designing, constructing, and operating our pipeline system, we demonstrate our commitment to protecting environmentally and culturally sensitive areas by:

 

–   Conducting environmental assessments and archaeological surveys;

 

–   Using environmentally sensitive construction techniques;

 

–   Siting pipelines along existing rights of way, roadways, or utility corridors if feasible;

 

–   Maintaining an open dialogue with neighboring communities; and

 

–   Conducting our operations in a manner that protects human health and the environment.

         

 

“Williams is focused on sustainable operations including ready-now solutions to address climate change and by setting a near-term goal for 2030, we will leverage our natural gas-focused strategy and today’s technologies to focus on immediate opportunities to reduce emissions in and around our business.”

 

– Alan Armstrong

  President and CEO

 

 

    

      

 

  Our scores amongst four of the most relevant and influential ESG ratings and rankings firms in 2020 reflected widespread recognition of our enhanced sustainability efforts.

 

LOGO   LOGO   LOGO   LOGO

We earned a B rating from the CDP, higher than the Oil & Gas Storage and Transportation sector C average and North America regional D average.

 

We were recently added to the Dow Jones North America Sustainable Index and DJSI ranked us in the top 7% in our peer group.

 

Sustainalytics ranked us in the top 3% in our peer group.

 

MSCI assigned us a stable rating of BB.

SOCIAL

 

  We position ourselves as an employer of choice by offering industry competitive compensation, including a comprehensive benefits package to provide for the health and welfare and retirement needs of our employees.

 

  We have policies and standards demonstrating respect for the dignity of the individual:

 

 

Our Code of Business Conduct provides a comprehensive resource governing ethical concerns, employee privacy and workplace matters, legal compliance, and other matters.

 

 

Our Equal Employment Opportunity Policy commits us to fairly treating all employees and candidates, without regard to characteristics having no bearing on job performance.

 

 

Our Prohibition of Workplace Discrimination and Harassment Policy addresses many forms of unwanted attention, including sexual harassment.

 

 

Our Human Rights Policy Statement commits us to respect principles aimed at promoting, protecting, and supporting all internationally recognized human rights and to avoid complicity in human rights abuses.

 

  Our Corporate Social Responsibility Team implements our community giving strategy including our matching gifts program, which matches employee, board member, and retiree contributions to eligible non-profit organizations, and the homegrown giving grants program, in which grants are made to any eligible non-profit organization in communities where Williams employees are involved.

GOVERNANCE

 

  We fervently believe in good corporate governance. Please see our disclosures in “Corporate Governance and Board Matters – Corporate Governance” above.

 

 

 

 

 

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BOARD AND COMMITTEE STRUCTURE AND MEETINGS

Board Meetings

Directors actively participate in Board and committee meetings. Meeting materials are distributed in advance of each regular Board meeting so that directors can prepare for meeting discussions.

The full Board met seven times in 2020. Each director serving on the Board during 2020 attended 100 percent of the 2020 Board and applicable committee meetings held during their time of Board service.

Board Committees

The Board has four standing committees: Audit, Compensation and Management Development, Governance and Sustainability, and Environmental, Health and Safety. Each standing committee has a charter adopted by the Board. Each committee chair gives a committee report to the full Board at each regular Board meeting. The Board annually elects each committee’s members and chair. Each committee has authority to retain, approve fees for, and terminate advisors as it deems necessary to assist in the fulfillment of its responsibilities. The chart below shows the current composition of the committees and the number of committee meetings held in 2020.

 

    DIRECTOR       AUDIT      

COMPENSATION

    AND MANAGEMENT    

DEVELOPMENT

 

    GOVERNANCE AND    

SUSTAINABILITY

 

    ENVIRONMENTAL,    

HEALTH, AND

SAFETY

Alan S. Armstrong

               

Stephen W. Bergstrom (Chairman of the Board)

      LOGO   LOGO    

Nancy K. Buese

      LOGO       LOGO

Stephen I. Chazen

  LOGO       LOGO    

Charles I. Cogut

  LOGO       LOGO    

Michael A. Creel

  LOGO           LOGO

Stacey H. Doré

  LOGO       LOGO    

Vicki L. Fuller

  LOGO           LOGO

Peter A. Ragauss

  LOGO       LOGO    

Rose M. Robeson

      LOGO       LOGO

Scott D. Sheffield

      LOGO       LOGO

Murray D. Smith

      LOGO       LOGO

William H. Spence

      LOGO   LOGO    

Number of meetings in 2020

  8   5   4   4

 

LOGO   Committee Chair

 

LOGO   Committee Member

   Note: Ms. Robeson was elected to the Board in December 2020 and Ms. Doré was elected to the Board in January of 2021. Accordingly, neither director participated in any of the 2020 Board or committee meetings.

 

 

 

  

 

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AUDIT COMMITTEE

 

Responsibilities

The Board has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The Audit Committee:

 

    appoints, evaluates, and approves the compensation of our independent registered public accounting firm;

 

    assists the Board in fulfilling its responsibilities for generally overseeing Williams’ financial reporting processes and the audit of Williams’ financial statements, including the integrity of Williams’ financial statements, Williams’ compliance with legal and regulatory requirements, and risk assessment and risk management;

 

    reviews the qualifications and independence of the independent registered public accounting firm;
  reviews the performance of Williams’ internal audit function and the independent registered public accounting firm;

 

  reviews Williams’ earnings releases;

 

  oversees investigations into complaints concerning financial matters;

 

  reviews with the General Counsel, and/or the Chief Ethics & Compliance Officer as needed, any actual and alleged violations of the Code of Business Conduct;

 

  reviews annually its charter and performance; and

 

  prepares the Report of the Audit Committee for inclusion in the annual proxy statement.
 

 

Independence Requirements

The Board has determined that Stephen I. Chazen, Charles I. Cogut, Michael A. Creel, Stacey H. Doré, Vicki L. Fuller, and Peter A. Ragauss, comprising all current members of the Audit Committee, meet the heightened independence requirements under the NYSE’s rules for persons serving on audit committees.

Financial Literacy, Experts

The Board has determined that:

 

   

all the members of the Audit Committee are “financially literate” as defined by the NYSE rules; and

 

   

all members of the Audit Committee, except for Charles I. Cogut and Stacey H. Doré, qualify as audit committee financial experts as defined by the SEC.

 

No member of the Audit Committee may serve on more than three public company audit committees, including the Company’s Audit Committee, unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve. As of the date of this proxy statement, no member of the Audit Committee is serving on more than three public company audit committees.

 

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ENVIRONMENTAL, HEALTH AND SAFETY COMMITTEE

 

Responsibilities

The Environmental, Health and Safety Committee:

 

    oversees, considers, and evaluates EH&S matters and engages directly with management and its advisors, who from time-to-time provide reports, analyses, and other information as may be requested by the Committee;

 

    provides oversight for the Company’s EH&S processes including ensuring compliance with applicable legal and regulatory requirements and evaluation of ways to address EH&S matters as part of the Company’s business operations and strategy;
  oversees management’s monitoring and enforcement of the Company’s policies to protect the health and safety of employees, contractors, customers, the public, and the environment;

 

  reviews, monitors, and reports to the Board on the Company’s performance and activities related to EH&S matters;

 

  to the extent deemed advisable by the Committee, engages independent advisors to serve the Committee’s needs;

 

  makes recommendations to the Board regarding actions to be taken with respect to EH&S matters; and

 

  reviews annually its charter and performance.
 

 

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COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE

 

Responsibilities

The Compensation and Management Development Committee:

 

  approves executive compensation philosophy, policies, and programs that align the interests of our executive officers with those of our stockholders;

 

  oversees the material risks associated with compensation structure, policies, and programs;

 

  assesses the results of the advisory votes on executive compensation;

 

  recommends to the Board equity-based compensation plans;

 

  recommends to the Board cash-based incentive compensation plans for the NEOs and other executives;

 

  sets corporate goals and objectives for compensation for the NEOs and other executives;

 

  evaluates the NEOs’ and certain other executives’ performance in light of those goals and objectives;

 

  approves the NEOs’ and certain other executives’ compensation, including salary, incentive compensation, equity-based compensation, and any other remuneration;

 

  along with the entire Board, annually reviews succession plans relating to the CEO and other executive officer positions, including plans to develop diverse candidates for leadership roles; 
  reviews diversity and inclusion organizational goals, metrics, and progress, while overseeing management’s efforts to increase diverse representation across recruiting, retention, and career development;

 

  approves, amends, modifies, or terminates, in its settlor (non- fiduciary) capacity, the terms of any benefit plan that does not require stockholder approval;

 

  reviews and discusses with management and, based on the review and discussions, recommends to the Board the Compensation Discussion and Analysis required by the SEC for inclusion in the annual proxy statement and annual report on Form 10-K;

 

  reviews annually and recommends to the Board the appropriate compensation of non-employee directors;

 

  develops, reviews, and recommends for Board approval, and then monitors the directors’ and executive officers’ compliance with, Williams’ stock ownership policy;

 

  reviews and recommends for Board approval the terms of Williams’ change-in-control program;

 

  assesses any potential conflicts of interest raised by the compensation consultants retained by management or the Committee and assesses the independence of any Committee advisor;

 

  reviews talent management programs and processes while overseeing management’s efforts to improve employee development at all career levels; and

 

  reviews annually its charter and performance.
 

 

Independence Requirements

The Board has determined that all members of the Compensation and Management Development Committee meet the heightened independence requirements under the NYSE’s rules for persons serving on compensation committees.

Independent Executive Compensation Advisor

The Compensation and Management Development Committee has selected and retained Frederic W. Cook & Co., an independent executive compensation consulting firm, to provide competitive market data and advice related to the CEO’s compensation level and incentive design; review and evaluate management-developed market data and recommendations on compensation levels, incentive mix, and incentive design for NEOs and certain other executives (excluding the CEO); develop the selection criteria and recommend comparator companies for executive compensation and performance comparisons; provide information on executive compensation trends and their implications to Williams; and provide competitive market data and advice on non-employee director compensation.

The Compensation and Management Development Committee evaluates the independence of Frederic W. Cook & Co., including consideration of the factors specified in Rule 10C-1 under the Exchange Act and the NYSE’s rules, to ensure that the advisors maintain objectivity and independence when rendering advice to the Committee. Frederic W. Cook & Co. does not provide any additional services to Williams. The compensation consultant reports to the Compensation and Management Development Committee and is independent of management. The Compensation and Management Development Committee has determined that the services Frederic W. Cook & Co. provides to the Committee do not create a conflict of interest.

 

 

 

 

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GOVERNANCE AND SUSTAINABILITY COMMITTEE

Responsibilities

 

The Governance and Sustainability Committee:

 

  develops and recommends director qualifications to the Board;

 

  identifies and recommends director candidates to the Board;

 

  reviews candidates recommended or nominated by stockholders;

 

  recommends to the Board the individual, or individuals, to be the Chairman of the Board and the CEO;

 

  reviews the CEO’s recommendations for individuals to be officers;

 

  monitors significant developments in the regulation and practice of corporate governance;

 

  provides oversight and guidance with regard to ESG matters;

 

  reviews the size, structure, and composition of the Board and its committees and recommends any changes to the Board;

 

  conducts a preliminary review of director independence and the financial literacy and expertise of the Audit Committee members;

 

  recommends assignments to the Board committees; 
  oversees and assists the Board in the review of the Board’s performance and reviews its own performance;

 

  reviews annually each standing committee’s charter, the Corporate Governance Guidelines, and the Williams Code of Business Conduct;

 

  oversees and reviews risks relating to Williams’ ethics and compliance programs and annually reviews Williams’ policies and procedures regarding compliance with the Code of Business Conduct;

 

  reviews annually the implementation and effectiveness of the Company’s ethics and compliance program with the General Counsel and/or the Chief Ethics & Compliance Officer, as applicable;

 

  reviews transactions between Williams and related parties;

 

  reviews stockholder proposals and correspondence and recommends responses to such proposals or correspondence when necessary;

 

  reviews our directors’ current service and requests to serve on boards of other companies; and

 

  reviews the performance of individual directors, as necessary.
 

 

CONSIDERATION OF NOMINEES

The Governance and Sustainability Committee is responsible for developing and recommending to the Board qualifications and criteria for identifying and assessing Board membership candidates. The Governance and Sustainability Committee applies a “Rooney Rule” requiring that the Board consider candidates with diverse backgrounds, including diversity of race, ethnicity, and gender, in establishing the initial list of director candidates from which new director nominees will be chosen. A preliminary assessment of each candidate is conducted based upon his or her resume, other biographical and background information, and the candidate’s willingness to serve. A candidate’s qualifications are then evaluated against the criteria set forth in “Proposal 1: Election of Directors,” as well as the specific needs of the Company at the time. Qualified new candidates are interviewed by the Chairman of the Board and the Chair of the Governance and Sustainability Committee. Candidates may then meet with other directors and senior management. At the conclusion of this process, the Governance and Sustainability Committee may recommend, and the Board act, to appoint the candidate to the Board and recommend that our stockholders elect such person as a director at the next annual meeting. The Governance and Sustainability Committee may source candidates through outside search firms when necessary and, in such case, the Rooney Rule is also applied. The Governance and Sustainability Committee uses the same process to evaluate all candidates regardless of the source of the nomination. For director nominees who are proposed to continue in their service on the Board, the Governance and Sustainability Committee considers prior performance and contributions to the Board.

 

 

 

 

  

 

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DIRECTOR RECOMMENDATIONS AND NOMINATIONS

The Governance and Sustainability Committee will consider written recommendations from stockholders for director nominations. If you wish to recommend a candidate for consideration by the Governance and Sustainability Committee, please forward the candidate’s name and a detailed description of the candidate’s qualifications, a document indicating the candidate’s willingness to serve, and evidence that you own Williams stock to: The Williams Companies, Inc., One Williams Center, MD 47, Tulsa, Oklahoma 74172, Attn: Corporate Secretary.

In addition to being able to recommend director candidates for nomination by our Board, our By-laws provide that stockholders may nominate director candidates for election at an annual meeting of stockholders. To do so, the stockholder must be a stockholder of record when notice to the Company is given and on the record date for the determination of the stockholders entitled to vote at such annual meeting of stockholders. The stockholder must also satisfy the procedures provided in our By-laws, including the notice procedures described below.

The notice of a stockholder nomination for the election of a director must be in proper written form as specified in our By-laws. The notice must be received by our corporate secretary at our principal executive offices not later than the close of business on the 90th calendar day, nor earlier than the close of business on the 120th calendar day, prior to the anniversary of the date of the immediately preceding annual meeting of stockholders. Accordingly, to be timely for our 2022 Annual Meeting of Stockholders, such notice must be received by our corporate secretary not earlier than December 28, 2021 and not later than January 27, 2022.

In addition to the above method for stockholders to make director nominations at a meeting of stockholders, our By-laws contain a “proxy access” provision. Pursuant to such provision, a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three years as of the date of the stockholder notice, may nominate and include in our proxy materials director candidates constituting up to two directors or 20% of the Board, whichever is greater, provided that the stockholder(s) continue to own such amount of shares through the annual meeting of stockholders. The stockholder(s) and the nominee(s) must also satisfy all other requirements specified in our By-laws, including providing certain securities schedules to be filed with the SEC.

Under the proxy access option, the notice must be received by our corporate secretary at our principal executive offices not later than the close of business on the 120th calendar day, nor earlier than the close of business on the 150th calendar day, prior to the anniversary of the date (as stated in our proxy materials) the definitive proxy statement was first released to stockholders in connection with the preceding year’s annual meeting of stockholders. Accordingly, to be timely for our 2022 Annual Meeting of Stockholders, such notice must be received by our corporate secretary not earlier than October 20, 2021 and not later than November 19, 2021.

In both options described above, to be an eligible nominee for election as a director, a nominee will have to satisfy the requirements specified in our By-laws, including the timely delivery of the following: a written representation and agreement, a completed and executed director questionnaire, and certain additional information specified in our By-laws.

The above described notices and procedures are summaries and do not purport to be complete. For further information, please refer to our By-laws which are included as an exhibit to our annual report on Form 10-K filed with the SEC and which are also available on our website at www.williams.com. For information concerning submitting a proposal regarding matters other than the election of directors, please see “May I submit a proposal for consideration at the 2022 Annual Meeting of Stockholders?”

 

 

 

 

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The Board unanimously recommends a vote “FOR” the election of the director nominees named in Proposal 1.

Our restated certificate of incorporation provides that the Board must consist of between five and 17 members, with the actual number of directors at any time to be determined by the Board. Our Board is declassified; therefore, each director nominee is considered for a term expiring at the Company’s next annual meeting of stockholders. Unless otherwise instructed, the individuals designated by the Board as proxies intend to vote to elect Messrs. Armstrong, Bergstrom, Chazen, Cogut, Creel, Ragauss, Sheffield, Smith, and Spence, and Mmes. Buese, Doré, Fuller, and Robeson. Should any of these nominees become unable for any reason to stand for election as a director, the designated proxies will vote to elect another nominee recommended by the Governance and Sustainability Committee. Alternatively, the Board may choose to reduce its size.

DIRECTOR NOMINEE EXPERIENCE AND QUALIFICATIONS

At each of its regularly scheduled meetings, in satisfaction of our Corporate Governance Guidelines, the Governance and Sustainability Committee evaluates the Board’s composition to assess the director skills and experience that are currently represented, as well as the skills and experience that, given the Company’s current situation and strategic plans, the Board may find valuable in the future. The Governance and Sustainability Committee seeks a variety of occupational and personal backgrounds on the Board in order to obtain a range of viewpoints and perspectives and to enhance the Board’s diversity in such areas as geography, race, gender, ethnicity, and age. In furtherance of such ends, the Governance and Sustainabilty Committee applies a Rooney Rule which requires the consideration of diverse director candidates. The Governance and Sustainability Committee also annually assesses the Board’s diversity as part of the director selection and nomination process. This assessment enables the Board to update, if necessary, the skills and experience it seeks in the Board as a whole, and in individual directors, as the Company’s needs evolve. For Board membership, the Governance and Sustainability Committee considers the appropriate balance of experience, skills, and attributes that best suits the needs of the Company and our stockholders. Such committee also develops long-term Board succession plans to ensure that an appropriate balance of skills and experience is maintained.

The minimum qualifications and attributes that the Governance and Sustainability Committee believes a director nominee must possess include:

 

  an understanding of business and financial affairs and the complexities of a business organization;

 

  genuine interest in Williams and in representing all our stockholders;

 

  a willingness and ability to spend the time required to function effectively as a director;

 

  an open-minded approach and the resolve to make independent decisions on matters presented for consideration;

 

  a reputation for honesty and integrity beyond question;

 

  independence as defined by the NYSE and qualifications otherwise required in accordance with applicable law or regulation;

 

  strong intellectual capital, performance enhancing ideas, and strong networks that contribute to stockholder value;

 

  ability to enhance the decision-making process by bringing relevant knowledge, an understanding of rigorous analysis, and a desire for constructive engagement; and

 

  demonstrated, seasoned judgment for decisions involving broad and multi-faceted issues.

 

      

 

 

  

 

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In evaluating the director nominees and in reviewing the qualifications and experience of the directors continuing in office, the Governance and Sustainability Committee considered a variety of factors. These include each nominee’s independence, financial literacy, personal and professional accomplishments, and experience in light of the Company’s needs. For incumbent directors, the factors also include past performance on the Board. Among other things, the Board has determined that it is important to have individuals on the Board with the skills, experiences, and attributes in the areas or with the attributes listed below:

 

 Energy Industry

 

 Financial and Accounting

 Executive Leadership

 

 Securities and Capital Markets

 Engineering and Construction

 

 Diversity

 Strategy Development and Risk Management

 

 Information Technology (including cybersecurity)

 Operating

 

 Corporate Governance

 Environmental

 

 Legal

 Marketplace Knowledge

 

 Public Policy and Government

Set forth below and on the following pages is certain information related to the director nominees, individually and in the aggregate.

 

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DIRECTOR NOMINEE MATRIX: SKILLS, EXPERIENCE, AND ATTRIBUTES

Each director nominee is individually qualified to make unique and substantial contributions to our Board. Collectively, their diverse viewpoints and independent-mindedness enhance the quality and effectiveness of Board deliberations and decision making that contribute to the effective oversight of the Company. This blend of skills, experience, and attributes is summarized below.

 

LOGO

                           
Energy Industry   LOGO   LOGO   LOGO   LOGO       LOGO   LOGO       LOGO   LOGO   LOGO   LOGO   LOGO
                           
Executive Leadership   LOGO   LOGO   LOGO   LOGO       LOGO   LOGO   LOGO   LOGO   LOGO   LOGO       LOGO
                           
Engineering and Construction   LOGO   LOGO                                   LOGO       LOGO
                           
Strategy Development and Risk Management   LOGO   LOGO       LOGO       LOGO   LOGO           LOGO   LOGO       LOGO
                           
Operating   LOGO   LOGO       LOGO           LOGO               LOGO       LOGO
                           
Environmental   LOGO   LOGO       LOGO                           LOGO       LOGO
                           
Marketplace Knowledge   LOGO   LOGO   LOGO   LOGO       LOGO   LOGO       LOGO   LOGO   LOGO   LOGO   LOGO
                           
Financial and Accounting           LOGO   LOGO       LOGO       LOGO   LOGO   LOGO           LOGO
                           
Securities and Capital Markets           LOGO   LOGO   LOGO   LOGO       LOGO   LOGO   LOGO            
                           
Diversity           LOGO               LOGO   LOGO       LOGO            
                           
Information Technology           LOGO               LOGO       LOGO               LOGO
                           
Corporate Governance                   LOGO       LOGO           LOGO            
                           
Legal                   LOGO       LOGO                        
                           
Public Policy and Government                           LOGO   LOGO               LOGO    
 

 

  

 

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LOGO

 

ALAN S.

ARMSTRONG

 

Director since 2011

 

President and

Chief Executive Officer

  

Alan S. Armstrong, 58, has served as a director and President and Chief Executive Officer of the Company since 2011. During his tenure, Williams has expanded its reach, currently touching about 30 percent of all U.S. natural gas volumes, through gathering, processing, transportation, and storage services. In addition, Mr. Armstrong also served as Chairman of the Board and Chief Executive Officer of the general partner of Williams Partners L.P. (“WPZ”), the master limited partnership that, prior to its 2018 merger with Williams, owned most of Williams’ gas pipeline and domestic midstream assets. Prior to being named as Williams’ CEO, Mr. Armstrong led the Company’s North American midstream and olefins businesses as Senior Vice President – Midstream. Previously, Mr. Armstrong served as Vice President of Gathering and Processing from 1999 to 2002; Vice President of Commercial Development from 1998 to 1999; Vice President of Retail Energy Services from 1997 to 1998; and Director of Commercial Operations for the company’s midstream business in the Gulf Coast region from 1995 to 1997. He joined Williams in 1986 as an engineer. Mr. Armstrong serves on the Board of Directors of BOK Financial Corporation and the American Petroleum Institute, as a member of the National Petroleum Council, and as a former board member of Access Midstream Partners, GP, LLC. Mr. Armstrong also serves on the boards of several education-focused organizations including the University of Oklahoma College of Engineering and Junior Achievement, USA. Mr. Armstrong is also a member of the boards of The Williams Foundation and Gilcrease Museum and is a trustee for The University of Oklahoma Foundation. Mr. Armstrong graduated from the University of Oklahoma in 1985 with a bachelor’s degree in civil engineering.

 

As Chief Executive Officer and President of Williams, former Chairman of the Board and Chief Executive Officer of the general partner of WPZ and due to his various senior leadership roles at Williams, Mr. Armstrong’s skills, experience, and attributes include: energy industry, executive leadership, engineering and construction, strategy development and risk management, operating, environmental, and marketplace knowledge.

       
       
            

LOGO

 

STEPHEN W.

BERGSTROM

 

Director since 2016

Chairman of the Board

 

Committees

 

Compensation and

Management Development

 

Governance and

Sustainability

  

Stephen W. Bergstrom, 63, has served as a director of the Company since 2016. Mr. Bergstrom has 40 years of experience in the energy and utility sectors. He was a director on the Board of American Midstream Partners GP, LLC, a natural gas gathering, processing and transporting company until they merged with ArcLight Capital Partners, LLC in July 2019. From 2013 to 2015, he served as President and Chief Executive Officer and Executive Chairman of the board of directors of American Midstream Partners’ general partner. Mr. Bergstrom acted as an exclusive consultant to ArcLight Capital Partners, an energy-focused investment firm, from 2003 to 2015, assisting ArcLight in connection with its energy investments. From 1986 to 2002, Mr. Bergstrom served in several leadership roles for Natural Gas Clearinghouse, which became Dynegy Inc., a major electric utility company. Mr. Bergstrom acted in various capacities at Dynegy, ultimately serving as President and Chief Operating Officer. Mr. Bergstrom began his career with Transco Energy Company, Inc. in 1980. Mr. Bergstrom earned a Bachelor of Science in Industrial Administration from Iowa State University.

 

As former President and Chief Executive Officer of the American Midstream Partners general partner, former exclusive consultant to ArcLight Capital Partners and due to his various leadership roles for Natural Gas Clearinghouse, Mr. Bergstrom’s skills, experience, and attributes include: energy industry, executive leadership, engineering and construction, strategy development and risk management, operating, environmental, and marketplace knowledge.

 

 

 

 

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WILLIAMS 2021 PROXY STATEMENT      

 


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NANCY K.

BUESE

 

Director since 2018

 

Committees

 

Compensation and

Management Development

 

Environmental,

Health and Safety

  

Nancy K. Buese, 51, has served as a director of the Company since 2018. Ms. Buese came to the Company with more than 25 years of experience in finance leadership roles. Ms. Buese currently serves as Executive Vice President and Chief Financial Officer of Newmont Corporation, the world’s largest gold producer with assets or operations on five continents. Before joining Newmont in 2016, Ms. Buese served as Executive Vice President and Chief Financial Officer of MPLX, a publicly traded energy company formed by Marathon Petroleum Corporation. Prior to MPLX’s acquisition of MarkWest Energy Partners in 2015, Ms. Buese served for eleven years as Executive Vice President and Chief Financial Officer of MarkWest Energy Partners. Prior to that, Ms. Buese worked in public accounting for twelve years, and is a former Partner with Ernst & Young. From 2009 through 2017, Ms. Buese served on the Board of Directors of UMB Financial Corporation. Ms. Buese earned her degree in Accounting and Business Administration from University of Kansas and is a Certified Public Accountant.

 

Bringing decades of accounting, financial, and executive experience to the Williams Board, and having held senior financial positions at Newmont Corporation, MPLX and MarkWest Energy Partners. Ms. Buese’s skills, experience, and attributes include: energy industry, executive leadership, financial and accounting, securities and capital markets, marketplace knowledge, diversity and information technology.

       
       
       
       

LOGO

 

STEPHEN I.

CHAZEN

 

Director since 2016

Chairman of the Board

 

Committees

 

Audit

 

Governance and

Sustainability

  

Stephen I. Chazen, 74, has served as a director of the Company since 2016. Currently, he is the chairman of the board, president and chief executive officer of Magnolia Oil and Gas Corp. Mr. Chazen retired as Chief Executive Officer of Occidental Petroleum in April 2016. He returned to Occidental’s Board as Chairman in April of 2020. Mr. Chazen began his career at Occidental in 1994 as Executive Vice President Corporate Development. He was named Chief Financial Officer in 1999 and served as Chief Financial Officer until 2010. Mr. Chazen was appointed President of Occidental in 2007. He was then named Chief Operating Officer in 2010 before being appointed Chief Executive Officer in May 2011. He was elected to the Board of Directors in 2010. Before joining Occidental, Mr. Chazen was Managing Director in Corporate Finance and Mergers and Acquisitions at Merrill Lynch. He worked as Director of Project Evaluation and Reservoir Engineering at Columbia Gas Development Corporation from 1977 to 1982. He began his career with Northrop Corporation in 1973 as a Laboratory Manager at the Johnson Space Center. Mr. Chazen is a former Chairman of the Board of the American Petroleum Institute and the Catalina Island Conservancy and is a former director of Ecolab Inc. Mr. Chazen was appointed to the University of Houston System Board of Regents in 2018 and serves on the Advisory Board at Rice University’s Baker Institute for Public Policy. He is a director of the National Parks Foundation. He is a Director of Houston Methodist Institute for Academic Medicine. Mr. Chazen holds a Ph.D. in Geology from Michigan State University, a master’s degree in Finance from the University of Houston, and a bachelor’s degree in Geology from Rutgers College.

 

Mr. Chazen brings to the Williams Board decades of executive leadership experience in the oil and gas industry, as well as significant mergers and acquisition and valuation expertise. Mr. Chazen’s skills, experience, and attributes include: energy industry, executive leadership, financial and accounting, securities and capital markets, strategy development and risk management, operating, environmental, and marketplace knowledge.

 

Mr. Chazen will be retiring from the Board following the Company’s 2022 Annual Meeting of Stockholders.

 

 

 

  

 

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CHARLES I.

COGUT

 

Director since 2016

 

Committees

 

Audit

 

Governance and

Sustainability

 

  

Charles I. Cogut, 74, has served as a director of the Company since 2016. Mr. Cogut is a retired partner at Simpson Thacher & Bartlett LLP (“STB”), where for many years he led the firm’s mergers and acquisitions and private equity practices, with a specialty in domestic, international and cross-border mergers and acquisitions, the representation of special committees of boards of directors, and buyouts and other corporate transactions. Mr. Cogut regularly advised boards of directors with respect to corporate governance matters and fiduciary responsibilities. Mr. Cogut joined STB in 1973; served as a partner from 1980 through 2012; and served as senior mergers and acquisitions counsel from 2013 through 2016. Mr. Cogut has been a member of the Board of Directors of Air Products and Chemicals, Inc. since 2015 and was a member of the Board of Directors of Patheon N.V. in 2017 prior to its sale. Mr. Cogut received his J.D. in 1973 from the University of Pennsylvania Carey Law School after graduating summa cum laude from Lehigh University in 1969. He is a member of the Board of Advisors of the University of Pennsylvania Carey Law School. He also serves as a Vice Chairman of the Board of Trustees and is a member of the Executive Committee of Cold Spring Harbor Laboratory, a private, not-for-profit research institution primarily focused on molecular biology.

 

Mr. Cogut brings to the Williams Board decades of legal and corporate experience, as well as significant mergers and acquisition and valuation expertise. Mr. Cogut’s skills, experience, and attributes include: corporate governance, securities and capital markets, and legal.

       
       
       
            

LOGO

 

MICHAEL A.

CREEL

 

Director since 2016

 

Committees

 

Audit

 

Environmental,

Health and Safety

  

Michael A. Creel, 67, has served as a director of the Company since 2016. Mr. Creel is an executive with 41 years of energy experience, including 16 years on large public company boards. Mr. Creel previously served as a Director and Chief Executive Officer of Enterprise Products Partners L.P. from 2007 until his retirement in 2015. Earlier, he served in positions of increasing responsibility with the company since 1999. He was also group vice chairman at EPCO, Inc., and Executive Vice President and Chief Financial Officer at Duncan Energy Partners L.P., a company engaged in natural gas liquids transportation, fractionation, marketing and storage, and petrochemical product transportation, gathering and marketing. He was also President and Chief Executive Officer at the general partner of Enterprise GP Holdings L.P. and held a number of executive management positions with Shell affiliate Tejas Energy and NorAm Energy Corp. Mr. Creel is a director and member of the Audit Committee of Lucid Energy Group LLC, a diversified energy company. Mr. Creel is a graduate of McNeese State University in Lake Charles, Louisiana, where he earned a bachelor’s degree in accounting, and is a Certified Public Accountant.

 

Mr. Creel brings to the Williams Board decades of executive leadership experience in the energy industry, as well as significant financial expertise. Mr. Creel’s skills, experience, and attributes include: energy industry, executive leadership, financial and accounting, securities and capital markets, strategy development and risk management, and marketplace knowledge.

 

 

 

 

          22

 

  

 

WILLIAMS 2021 PROXY STATEMENT      

 


Table of Contents

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LOGO

 

STACEY H.

DORÉ

 

Director since 2021

 

Committees

 

Audit

 

Governance and

Sustainability

  

Stacey H. Doré, 48, has served as a director of the Company since January 2021. Ms. Doré currently serves as president and chief executive officer of Sharyland Utilities, L.L.C., a regulated Texas-based electric transmission utility. She also serves as president of Hunt Utility Services, a business services company that manages Sharyland Utilities, and senior vice president of Utility & Power Operations for Hunt Energy, a diversified global company that invests in oil and gas exploration and production, refining, and electric power projects. Prior to this she served as senior vice president and general counsel of InfraREIT, Inc. until its sale in 2019. Ms. Doré previously held leadership positions of increasing responsibility with Energy Future Holdings, a privately held company with a portfolio of competitive and regulated energy companies, eventually serving as executive vice president, general counsel, and co-chief restructuring officer. Before her entry into the energy industry, Ms. Doré practiced law for more than a decade with Vinson & Elkins after earning her degree from Harvard Law School. She also holds a Bachelor of Arts degree in journalism from the University of Southwestern Louisiana.

 

Ms. Doré brings to the Williams Board 23 years of experience in energy and law. Ms. Doré’s skills, experience, and attributes include: energy industry, executive leadership, corporate governance, public policy and government, strategy development and risk management, marketplace knowledge, information technology, legal, and diversity.

       
       
       
       

LOGO

 

VICKI L.

FULLER

 

Director since 2018

 

Committees

 

Audit

 

Environmental,

Health and Safety

  

Vicki L. Fuller, 63, has served as a director of the Company since 2018. Ms. Fuller joined the Williams Board after retirement from the New York State Common Retirement Fund (“NYSCRF”) where she served as Chief Investment Officer beginning in August 2012. The fund is the third largest public pension fund in the nation and holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. Prior to joining NYSCRF, Ms. Fuller spent 27 years in leadership positions at AllianceBernstein Holding L.P., which has approximately $500 billion in assets under management. She joined the company in 1993 from the Equitable Capital Management Corporation, which was acquired by Alliance Capital Management LP (in 2000, the company became AllianceBernstein LP after the company acquired Sanford C. Bernstein). In October 2019, Ms. Fuller was appointed to the board of directors of Treliant, LLC, an international multi-industry consulting firm specializing in regulatory requirements. In 2018, Ms. Fuller was appointed to the Board of Trustees for Fidelity Equity and High Income Funds. In August 2020, Ms. Fuller joined the Blackstone/ GSO Secured Lending Fund and Blackstone Private Credit Fund board. Ms. Fuller, who was inducted into the National Association of Securities Professionals Wall Street Hall of Fame, was named to Chief Investment Officer Magazine’s “Power 100” and received the Urban Technology Center’s Corporate Leadership Award. She has also been named one of the most powerful African Americans on Wall Street by Black Enterprise.

 

Ms. Fuller brings significant executive leadership, investment and corporate experience to the Williams Board. Ms. Fuller’s skills, experience, and attributes include: executive leadership, public policy and government, securities and capital markets, financial and accounting, and diversity.

 

 

 

  

 

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LOGO

 

PETER A.

RAGAUSS

 

Director since 2016

 

Committees

 

Audit (Chair)

 

Governance and

Sustainability

  

Peter A. Ragauss, 63, has served as a director of the Company since 2016. Mr. Ragauss retired from Baker Hughes, an oilfield services company, in November 2014, after serving eight years as Senior Vice President and Chief Financial Officer. Mr. Ragauss currently serves as a director of Skulte LNG, a private energy company in Latvia. He joined the Board of Directors of Apache Corporation in December 2014. From 2003 to 2006, prior to joining Baker Hughes, Mr. Ragauss was Controller, Refining and Marketing, for BP Plc. From 2000 to 2003, he was Chief Executive Officer for Air BP. From 1998 to 2000, he was assistant to group chief executive for BP Amoco. He was Vice President of Finance and Portfolio Management for Amoco Energy International when Amoco Corporation merged with BP in 1998. Earlier in his career, from 1996 to 1998, Mr. Ragauss served as Vice President of Finance for El Paso Energy International. He held positions of increasing responsibility at Tenneco Inc. from 1993 to 1996 and Kidder, Peabody & Co. Incorporated from 1987 to 1993. Mr. Ragauss holds a master’s degree from Harvard Business School and bachelor’s degree in Mechanical Engineering from Michigan State University.

 

Bringing a wealth of accounting, financial, and executive experience to the Williams Board, and having held senior positions including Chief Executive Officer, Chief Financial Officer, Controller, and Vice President of Finance, Mr. Ragauss’ skills, experience, and attributes include: energy industry, executive leadership, financial and accounting, securities and capital markets, information technology, and marketplace knowledge.

       
       
       
       

LOGO

 

ROSE M.

ROBESON

 

Director since 2020

 

Committees

 

Compensation and

Management Development

 

Environmental,

Health and Safety

  

Rose M. Robeson, 60, has served as a director of the Company since December 2020. Ms. Robeson served as chief financial officer of DCP Midstream LLC from January 2002 to May 2012. She also served as the chief financial officer of DCP Midstream GP LLC, the general partner of DCP Midstream Partners, LP, from May 2012 until January 2014. Ms. Robeson previously held finance positions of increasing responsibility with Kinder Morgan, Total Petroleum, Inc. and Ernst & Young. Ms. Robeson holds a Bachelor of Science degree in accounting from the Northwest Missouri State University and became a certified public accountant in 1983. Recognized to the “Top Women in Energy – 2014” by the Denver Business Journal, Ms. Robeson is a member of the board of directors of SM Energy, Antero Midstream Corporation and Newpark Resources, Inc.

 

Ms. Robeson brings 32 years of experience in the energy industry, and as an SEC Audit Committee Financial Expert, she currently serves on the boards and chairs the audit committees of three other publicly traded energy companies. In addition, she serves on an environmental, social and governance committee as well as other board committees. Ms. Robeson’s skills, experience, and attributes include: energy industry, executive leadership, corporate governance, securities and capital markets, financial and accounting, strategic development and risk management, marketplace knowledge, and diversity.

 

 

 

 

          24

 

  

 

WILLIAMS 2021 PROXY STATEMENT      

 


Table of Contents

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LOGO

 

SCOTT D.

SHEFFIELD

 

Director since 2016

 

Committees

 

Compensation and

Management Development

(Chair)

  

Scott D. Sheffield, 68, has served as a director of the Company since 2016. Since February 2019, Mr. Sheffield has served as Chief Executive Officer of Pioneer Natural Resources Company, a large domestic upstream oil and gas company. Mr. Sheffield also served as Chief Executive Officer of the company from August 1997 through December 2016. From August 1999 until February 2019, Mr. Sheffield served as Pioneer Natural Resources’ Non-Executive Chairman of the Board of Directors. He was President of the company from August 1997 to November 2004. Mr. Sheffield was the Chairman of the Board of Directors and Chief Executive Officer of Parker & Parsley Petroleum Company, a predecessor company of Pioneer Natural Resources Company, from January 1989 until August 1997. Mr. Sheffield joined Parker & Parsley as a petroleum engineer in 1979; was promoted to Vice President of Engineering in 1981; was elected President and a director in 1985; and became Parker & Parsley’s Chairman of the Board and Chief Executive Officer in 1989. Mr. Sheffield served as a director of Santos Limited, an Australian exploration and production company, from 2014 through 2017. He previously served as a director from 1996 to 2004 on the board of Evergreen Resources, Inc., an independent natural gas energy company. Mr. Sheffield is a distinguished graduate of The University of Texas with a Bachelor of Science degree in Petroleum Engineering.

 

With more than 40 years of experience in the energy industry, including his position as Chief Executive Officer and Chairman of the Board of Pioneer Natural Resources and his former service as a director of Santos Limited, Mr. Sheffield’s skills, experience, and attributes include: energy industry, executive leadership, engineering and construction, strategic development and risk management, operating, environmental, and marketplace knowledge.

 

Environmental,

Health and Safety

  
  

LOGO

 

MURRAY D.

SMITH

 

Director since 2012

  

Murray D. Smith, 71, has served as a director of the Company since 2012. Mr. Smith is currently president of Murray D. Smith and Associates, an energy consulting firm. Previously, he held various positions in the Canadian government. As an elected member of the Legislative Assembly of Alberta, Canada, Mr. Smith served in four different Cabinet portfolios between 1993 and 2004. As Minister of Energy of Alberta from 2001 to 2004, Mr. Smith oversaw the transformation of the electricity sector into a competitive wholesale generation market and initiated the largest industrial tax reduction in the Province’s history. Mr. Smith served as Representative of the Province of Alberta to the United States of America in Washington, D.C., from 2005 to 2007. Prior to becoming an elected official, Mr. Smith was an independent businessman, owning a number of Alberta-based energy services companies. Currently, he is a director of Surge Energy Inc., a publicly-traded oil and gas company with operations throughout Alberta and Saskatchewan.

 

As a former member of the Legislative Assembly of Alberta, Canada, diplomat, and now an energy consultant, Mr. Smith’s skills, experience, and attributes include: energy industry, public policy and government, and marketplace knowledge.

Committees

 

Compensation and

Management Development

 

Environmental, Health

and Safety (Chair)

  

 

 

 

  

 

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LOGO

 

WILLIAM H.

SPENCE

 

Director since 2016

 

Committees

 

Compensation and

Management Development

 

Governance and

  

William H. Spence, 63, has served as a director of the Company since 2016. Mr. Spence retired on March 1, 2021 as Chairman of the Board of PPL Corporation, one of the largest investor-owned utility companies in the United States. He was elected Chairman in 2012. The PPL family of companies, with assets of more than $40 billion, delivers electricity and natural gas to about 10 million customers in the United States and the United Kingdom. Mr. Spence was named President and Chief Executive Officer in 2011 until his retirement in June 2020. Previously, he had 19 years of service with Pepco Holdings, Inc., where he held a number of senior management positions. Mr. Spence serves on the boards of numerous industry organizations including those dealing with research, cyber and physical security, the environment, and electric reliability. In February 2021 Mr. Spence joined the board of Pinnacle West Capital Corporation, an investor- owned electric utility holding company based in Phoenix, Arizona. He also serves on several non-profit community organizations that focus on community education, health, and human services. Mr. Spence earned a bachelor’s degree in petroleum and natural gas engineering from Pennsylvania State University and a master’s degree in business administration from Bentley College. Mr. Spence also is a graduate of the Executive Development Program at the University of Pennsylvania’s Wharton School and the Nuclear Technology Program of the Massachusetts Institute of Technology.

 

As former Chairman, President and Chief Executive Officer, Executive Vice President and Chief Operating Officer of PPL Corporation, and due to his several senior management positions with Pepco Holdings, Inc., Mr. Spence’s skills, experience, and attributes include: energy industry, executive leadership, engineering and construction, financial and accounting, strategy development and risk management, operating, environmental, information technology, and marketplace knowledge.

Sustainability (Chair)   

 

 

 

 

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WILLIAMS 2021 PROXY STATEMENT            

 


Table of Contents

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The following table sets forth information known to us concerning beneficial owners of more than five percent of our common stock. Unless otherwise indicated, the persons named have sole voting and investment power with respect to the shares listed.

 

    Title of Class    Name and Address of Beneficial Owner  

Number of Shares

of Common Stock

                      Percent of Class(4)      

    Common Stock

  

BlackRock, Inc. (1)

55 East 52nd Street

New York, New York 10055

 

    108,077,096             8.90%                  

 

    Common Stock

  

 

The Vanguard Group (2)

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

 

    107,156,047             8.82%                  

    Common Stock

  

State Street Corporation (3)

One Lincoln Street

Boston, Massachusetts 02111

 

    69,945,662             5.76%                  

 

(1)

According to a Schedule 13G/A filed with the SEC on February 1, 2021, BlackRock, Inc., an investment management corporation, may beneficially own the shares of common stock listed in the table above. The 13G/A indicates that BlackRock, Inc. may have sole voting power over 98,190,803 shares of our common stock and sole dispositive power over 108,077,096 shares of our common stock.

 

(2)

According to a Schedule 13G/A filed with the SEC on February 10, 2021, The Vanguard Group, an investment advisor, may beneficially own the shares of common stock listed in the table above. The Vanguard 13G/A indicates that The Vanguard Group may have sole voting power over 0 shares of our common stock, sole dispositive power over 101,190,912 shares of our common stock, shared voting power over 2,611,018 shares of our common stock, and shared dispositive power over 5,965,135 shares of our common stock.

 

(3)

According to a Schedule 13G filed with the SEC on February 11, 2021, State Street Corporation, an investment management corporation, may beneficially own the shares of common stock listed in the table above. The 13G indicates that State Street Corporation may have shared voting power over 63,890,742 shares of our common stock and shared dispositive power over 69,935,473 shares of our common stock.

 

(4)

Ownership percentage is reported based on 1,214,757,033 shares of common stock outstanding on February 25, 2021.

    

 

 

  

 

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The following table sets forth, as of February 25, 2021, the number of shares of our common stock beneficially owned by each of our directors and nominees for directors, by the NEOs, and by all directors and executive officers as a group.

 

  Name of Beneficial

  Owner

  

Shares of Williams

Common Stock

Owned Directly

or Indirectly

    

Williams Shares

Underlying Stock

Options  (1)

     Williams Shares
Underlying RSUs 
(2)
     Total Shares
Beneficially Owned
     Percent of Class (3)    

  Alan S. Armstrong (4)

     833,964              1,159,344             353,469                2,346,777              *      

  Stephen W. Bergstrom

     44,150              —             73,235                117,385              *      

  Nancy K. Buese

     —              —             23,642                23,642              *      

  Stephen I. Chazen

     43,428              —             30,692                74,120              *      

  Charles I. Cogut

     1,000              —             33,517                34,517              *      

  Michael A. Creel (5)

     67,225              —             30,692                97,917              *      

  Stacey H. Doré

     —              —             3,229                3,229              *      

  Vicki L. Fuller

     —              —             22,817                22,817              *      

  Peter A. Ragauss

     3,428              —             30,692                34,120              *      

  Rose M. Robeson

     —              —             4,104                4,104              *      

  Scott D. Sheffield

     4,144              —             30,692                34,836              *      

  Murray D. Smith (6)

     19,998              —             52,457                72,455              *      

  William H. Spence

     10,500              —             36,033                46,533              *      

  Walter J. Bennett

     88,044              164,955             —                252,999              *      

  John D. Chandler (7)

     95,377              80,029             —                175,406              *      

  Micheal G. Dunn

     107,724              189,866             150,253                447,843              *      

  Chad J. Zamarin

     100,442              80,029             —                180,471              *      

All directors and executive officers as a group (22 persons)

     1,517,510              1,764,811             875,524                4,157,845              *      

* Less than 1%

 

(1)

The SEC deems a person to have beneficial ownership of all shares that the person has the right to acquire within 60 days. Amounts reflect shares that may be acquired upon the exercise of stock options granted under Williams’ equity plan that are currently exercisable, will become exercisable, or would become exercisable upon the voluntary retirement of such person, within 60 days of February 25, 2021.

 

(2)

The SEC deems a person to have beneficial ownership of all shares that the person has the right to acquire within 60 days. Amounts reflect shares that would be acquired upon the vesting of restricted stock units (“RSUs”) granted under Williams current or previous equity plans that will vest or that would vest upon the voluntary retirement of such person, within 60 days of February 25, 2021. RSUs have no voting or investment power.

 

(3)

Ownership percentage is reported based on 1,214,757,033 shares of common stock outstanding on February 25, 2021, plus, as to the holder thereof only and no other person, the number of shares (if any) that the person has the right to acquire as of February 25, 2021, or within 60 days from that date, through the exercise of all options and other rights.

 

(4)

Includes 34,264 shares held in the Alan and Shelly Armstrong Family Foundation dated December 16, 2015, Alan S. and Shelly S. Armstrong, Trustees.

 

(5)

Includes 52,500 shares held in the B and B Living Trust dated February 2, 2012, Michael A. and Kathy R. Creel, Trustees.

 

(6)

Includes 10,150 shares held by Murray D. Smith and Associates Limited.

 

(7)

Includes 33,000 shares held by John D. Chandler Family Investments dated September 30, 2016, John D. and Barbara A. Chandler, Trustees.

 

    

 

 

 

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WILLIAMS 2021 PROXY STATEMENT          

 


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The Compensation Discussion and Analysis (“CD&A”) provides a detailed description of the objectives and principles of Williams’ executive compensation programs. It explains how compensation decisions are linked to performance as compared to the Company’s strategic goals and stockholder interests. Generally, Williams’ executive compensation programs apply to all officers; however, this CD&A focuses on the Named Executive Officers (“NEOs”) for the Company for the 2020 fiscal year. The Company’s NEOs for the 2020 fiscal year are Mr. Armstrong, Mr. Dunn, Mr. Zamarin, Mr. Chandler, and Mr. Bennett:

 

LOGO   LOGO   LOGO   LOGO   LOGO
Alan S. Armstrong   Micheal G. Dunn   Chad J. Zamarin   John D. Chandler   Walter J. Bennett

President and

Chief Executive Officer

 

EVP,

Chief Operating Officer

 

SVP,

Corporate Strategic

 

SVP,

Chief Financial Officer

 

SVP,

Gathering & Processing

    Development    

We seek stockholder support on our executive compensation pay programs annually. In 2020, our stockholders supported our programs with 77.40 percent “for” votes. This followed 97.07 percent support the previous year. Our compensation programs continue to evolve, and certain changes were made in 2020 and 2021. We engaged with many of our investors in 2020 and discussed potential design and performance metric changes and reinforced our strong historical linkage between realized compensation, company performance, and stock price performance. We address these changes and the strong linkage between pay and performance throughout this document. While we made certain changes to our programs for 2021, none should be viewed as a direct result of the Say on Pay result.

OUR COMMITMENT TO PAY FOR PERFORMANCE

Pay for Performance

We design our compensation programs to support our commitment to performance. In 2020, at target, 79 percent or more of a NEO’s annual target compensation is variable based on our company performance.

 

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The Summary Compensation Table provides SEC required disclosures for the 2018, 2019, and 2020 calendar years. These disclosures require the reporting of accounting-based grant date fair values for all stock-based compensation. These values remain fixed in Summary Compensation Table disclosures and are not adjusted to reflect how the Company’s business and/or stock price performance actually impact the value of stock awards earned by our NEOs. To supplement the SEC required disclosure, the following chart compares the accounting grant date fair value of stock-based awards for Mr. Armstrong in 2016, 2017, and 2018 which vested in 2019, 2020, and 2021, respectively. The table shows the grant values which were included in the Summary Compensation Table in relation to the realizable value as of the vesting and distribution date of the RSU awards. The stock options are valued based on their intrinsic value as of December 31, 2020 at a stock price of $20.05. The realizable value shown for time-based restricted stock unit (“RSU”) awards includes accrued cash dividend equivalents which were paid upon the distribution of the award. The 2016 performance-based awards, which vested in 2019, and the 2017 performance-based award, which vested in 2020, distributed just 31.8 percent and 44.4 percent of the targeted number of RSUs, respectively. The 2018 performance-based award, which vested in February 2021, distributed 134.4 percent of the targeted number of RSUs awarded. This is the first above target award distribution since the 2012 performance-based award vested in early 2015.

The following chart details Mr. Armstrong’s realizable equity pay for awards that vested during 2019, 2020, and 2021. In aggregate, Mr. Armstrong’s realizable equity compensation during this period is less than 55 percent of what was targeted for his long-term incentive pay. The Compensation and Management Development Committee (“Committee”) believes it is important to demonstrate this correlation between executive pay and stock price performance.

 

CEO Target Equity Pay Compared to Realizable Equity Pay

 

LOGO

 

     
Year of Grant    2016      2017      2018  
     
Year of Vesting    2019      2020      2021  
 
LOGO   Performance-Based Awards              $3,830,750           $1,185,385                      $4,026,872           $1,243,576                      $4,590,143           $4,280,298        
     
LOGO   Time-Based Awards              $1,437,499           $1,730,408                      $1,499,999           $1,330,099                      $1,590,001           $1,497,083        
 
LOGO   Stock Option Awards              $1,150,003           $0                      $1,248,860           $0                      $1,270,144           $0        
     
LOGO   Total Equity Pay              $6,418,252           $2,915,793                      $6,775,731           $2,573,675                      $7,450,288           $5,777,381        
     
Percent Difference Between Realizable Equity Pay and Target Equity Pay           (54.6%)                (62.0%)              (22.5%)     

    

 

 

 

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Long-term Incentives

Annual equity awards provide the most significant differentiation in pay and performance in our executive compensation program. We use equity awards to align compensation with the long-term interests of our stockholders. Equity awards in 2020 consist of performance-based RSUs and time-based RSUs. Stock options were removed from the equity mix in 2019. The largest component of our CEO’s long-term incentive award is performance-based RSUs. The 2017 performance-based RSU awards, which vested in 2020, utilized relative total shareholder return (“TSR”) to determine performance and the actual number of units that vest. In 2018 and 2019, the performance-based RSU awards utilized both relative TSR and return on capital employed (“ROCE”) to determine performance and the actual number of units that vest. The 2020 performance-based RSU awards utilize ROCE and Debt to EBITDA Ratio as equally weighted metrics measured against preestablished targets. Relative TSR is used as a modifier rather than a core metric and the initial performance result may be increased or decreased by 25 percent.

Annual Incentive Program

Our performance-based cash compensation is paid under our Annual Incentive Program (“AIP”) which is based on the Company’s financial, environmental, and safety performance and the NEO’s individual performance. Under this program, cash compensation reflects annual business performance in 2020 and is based on weighted measures of adjusted EBITDA, controllable costs, environmental and safety performance. In 2020, Williams again produced strong operational and financial results which produced above target AIP awards.

2020 BUSINESS OVERVIEW

We demonstrated tremendous business resiliency in a year of unprecedented challenges for our industry and our country. Our strong results in 2020 have demonstrated just how durable our business can be against several headwinds that the industry has faced: including external factors such as the COVID-19 pandemic, oil price collapse, customer bankruptcies, and an active hurricane season in the Gulf of Mexico. Despite these challenges, we were able to deliver on, and exceed the original financial guidance we provided coming in to 2020. The following table highlights this strong performance by detailing financial results and three-year compounded growth rates (“CAGR”) for Adjusted EBITDA, Distributable Cash Flow, and Adjusted Earnings Per Share. Additionally, we provide our three-year CAGR for Operating Margin and ROCE. We also provide information highlighting our meaningful ESG-related progress. This table is intended to highlight the strong financial performance and growth the Company has delivered during this time frame. Additionally, the Company has exceeded the midpoint of our guidance to the market for Adjusted EBITDA in each of the three most recently completed calendar years.

Growing Our Key Financial and Operational Metrics While Also Reducing Leverage

 

           

 

Adjusted

EBITDA

 

  

 

Distributable

Cash Flow

 

  

 

Adjusted Earnings

per Share

 

  

 

Operating

Margin % (1)

 

  

ROCE % (2)

(Return on

Capital Employed)

 

  

 

ESG

 

           

2018         $ 4.64 B

 

2019         $ 5.02 B

 

2020         $ 5.11 B

 

2018-2020 CAGR (3)

 

5%

   2018         $2.87 B

 

2019         $3.30B

 

2020         $3.36 B

 

2018-2020 CAGR  (3)

 

8%

   2018         $ 0.79

 

2019         $ 0.99

 

2020         $ 1.10

 

2018-2020 CAGR  (3)

 

18%

   2018-2020

 

CAGR (3)

 

5%
Improvement

   2018-2020

 

CAGR (3)

 

~9%
Improvement

   Added to

Dow Jones

North America

Sustainability

Index in 2020

 

           
LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
 
                 Net Debt to Adjusted EBITDA Improved from 5.26x in 2016 to 4.35x in 2020

Note: This table contains non-GAAP measures. A reconciliation of these non-GAAP financial measures to their nearest GAAP comparable financial measure is included in the appendix.

 

(1)

Operating margin ratio = operating margin/gross margin: Excludes depreciation, amortization expense, impairment charges, and other expenses not associated with operating the business.

 

(2)

Return on Capital Employed (ROCE) is Adjusted EBITDA, less included depreciation and amortization, divided by the sum of the average balances of Investments, Property, plant, and equipment – net, and Intangible assets – net.

 

(3)

CAGR is compound annual growth rate.

 

    

 

 

  

 

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Additionally, the items below detail select key accomplishments in 2020.

We maintained our pre-COVID 2020 financial guidance, without adjustment, and achieved or exceeded the midpoint of key guidance metrics.

Williams became the first midstream company to announce a climate commitment, setting a near-term goal of 56% absolute reduction in company-wide greenhouse gas emissions by 2030 which will place the company on a positive trajectory to be net zero carbon emissions by 2050.

Our scores amongst four of the most relevant and influential ESG Ratings & Rankings firms in 2020 reflected widespread recognition of our enhanced sustainability efforts.

 

  We earned a B rating from the CDP, higher than the Oil & Gas Storage and Transportation sector C average and North America regional D average.

 

  We were recently added to the Dow Jones North America Sustainable Index and DJSI ranked the company in the top 7% of its peer group.

 

  Sustainalytics ranked us in the top 3% of its peer group.

 

  The company maintained a stable rating of BB with MSCI.

We achieved record gathering volumes of 13.2 Bcf/d and record contracted transmission capacity of 22.2 Bcf/d.

Significant expansion project updates for the period, including projects placed into service are described below.

Transmission & Gulf of Mexico

Hillabee

In February 2016, the FERC issued a certificate order for the initial phases of Transco’s Hillabee Expansion Project. The project involves an expansion of Transco’s existing natural gas transmission system from Station 85 in west central Alabama to an interconnection with the Sabal Trail pipeline in east central Alabama. The project is being constructed in phases, and all of the project expansion capacity is dedicated to Sabal Trail pursuant to a capacity lease agreement. Phase I was completed in 2017 and it increased capacity by 818 Mdth/d. We placed Phase II into service on May 1, 2020. Together, the first two phases of the project increased capacity by 1,025 Mdth/d.

Southeastern Trail

In October 2019, we received approval from the FERC to expand Transco’s existing natural gas transmission system to provide incremental firm transportation capacity from the Pleasant Valley interconnect with Dominion’s Cove Point Pipeline in Virginia to the Station 65 pooling point in Louisiana. We placed 230 Mdth/d of capacity under the project into service in the fourth quarter of 2020, and the project was fully in service on January 1, 2021. In total, the project increased capacity by 296 Mdth/d.

Gathering & Processing

Project Bluestem

We expanded our presence in the Mid-Continent region through building a 189-mile NGL pipeline from our fractionator and NGL storage facilities near Conway, Kansas, to an interconnection with a third-party NGL pipeline system in Oklahoma, providing us with firm access to Mt. Belvieu pricing. As part of the project, the third-party constructed a 110-mile pipeline extension of its existing NGL pipeline system that will have an initial capacity of 120 Mbbls/d. The pipeline and extension projects were placed into service on December 1, 2020. Further, during the first quarter of 2019, we exercised an option to purchase a 20 percent equity interest in Targa Train 7, a Mt. Belvieu fractionation train developed by the third party, which was placed into service in the first quarter of 2020.

As of December 31, 2019, we effectively owned a 29 percent indirect interest in Blue Racer through our 58 percent interest in Caiman II, whose primary asset is a 50 percent interest in Blue Racer. On November 18, 2020, we paid $157 million, net of cash acquired, to acquire an additional 41 percent ownership interest in Caiman II. We now control and consolidate Caiman II, reporting the 50 percent interest in Blue Racer as an equity-method investment.

 

    

 

 

 

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The accompanying chart compares Williams’ cumulative TSR on our common stock (assuming reinvestment of dividends) to the cumulative total return of the S&P 500 Stock Index, the Arca Natural Gas Index, and the median of the comparator companies used to measure relative TSR performance in our 2020 performance-based RSU awards. For more details on our comparator company group, see the CD&A section titled “Determining Our Comparator Group.” The graph below assumes an initial investment of $100 at the beginning of the period on December 31, 2017.

3 Year Total Stockholder Return

 

LOGO

 

       
  2017 2018 2019 2020
         

LOGO   The Williams Companies, Inc.

$100.00 $76.12 $86.94 $80.33
         

LOGO   S&P 500 Index

$100.00 $95.61 $125.70 $148.82
         

LOGO   2020 Comparator Company Group Median

$100.00 $84.47 $114.98 $88.81
         

LOGO   Arca Natural Gas Index

$100.00 $68.28 $67.43 $58.35

COMPENSATION SUMMARY

Objective of Our Compensation Programs

The role of compensation is to attract and retain the talent needed to increase stockholder value and to help our businesses meet or exceed financial and operational performance goals. Our compensation programs’ objectives are to reward our NEOs and employees for successfully implementing our strategy to grow our business and create long-term stockholder value. To that end, in 2020 we used ROCE and Debt to EBITDA Ratio, with relative TSR as a modifier, to measure long-term performance and we used adjusted EBITDA, controllable costs, safety, and environmental metrics to measure annual performance. We believe using separate long-term and annual metrics to incent and pay NEOs helps ensure that we make business decisions aligned with the long-term interests of our stockholders.

 

    

 

 

 

            

 

  

 

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OUR PAY PHILOSOPHY

Our pay philosophy throughout the entire organization is to pay for performance, be competitive in the marketplace, and consider the value a job provides to the Company. Our compensation programs reward NEOs not just for accomplishing goals, but also for how those goals are pursued. The principles of our pay philosophy influence the design and administration of our pay programs. Decisions about how we pay NEOs are based on these principles. The Committee uses several types of pay that are linked to both our long-term and short-term performance in the executive compensation programs. Included are long-term incentives, annual cash incentives, base pay, and benefits. The chart below illustrates the linkage between the types of pay we use and our pay principles.

 

    Pay Principles   

    Long-term    

Incentives

  

    Annual Cash    

Incentives

       Base Pay            Benefits        

Pay should reinforce business objectives and values.

           

A significant portion of a NEO’s total pay should be variable based on performance.

           

Incentive pay should balance long-term, intermediate, and short-term performance.

           

Incentives should align interest of NEOs with stockholders.

           

Pay should foster a culture of collaboration with shared focus and commitment to our Company.

           

Incentives should enforce the value of safety within our Company.

           

Pay opportunities should be competitive.

           

A portion of pay should be provided to compensate for the core activities required for performing in the role.

           

    

 

 

 

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OUR COMMITMENT TO PAY FOR PERFORMANCE

Roles in the Compensation Recommendation and Decision Process

 

LOGO

 

  

LOGO

 

  

LOGO

 

  

LOGO

 

  

LOGO

 

         

Role of Board

of Directors

  

Role

of Committee

  

Role

of CEO

  

Role of Independent

Consultant

  

Role

of Management

       

· Reviews CEO performance (evaluations, CEO self-assessment, and company performance)

 

· Approves Board of Directors pay

  

· Determines CEO and NEO pay

 

· Recommends Board of Directors pay

 

· Seeks input from independent consultant

 

· Engages independent consultant on comparator groups and Board of Director and CEO pay

  

· Reviews NEO performance

 

· Reviews competitive market information

 

· Recommends NEO pay, including base pay adjustments, AIP, LTI and any other compensation

 

· No role in setting compensation for his/ her role

  

· Assists Committee in discussions and decisions regarding NEO compensation

 

· Provides competitive market data for CEO

 

· Develops comparator group, with input from Committee and Management

  

· Human Resources provides CEO with data from comparator group proxies

 

· Human Resources provides CEO with pay information from various compensation surveys

2020 COMPARATOR GROUP

Determining Our Comparator Group

Companies in our executive compensation benchmarking comparator group have a range of assets, market capitalization, and enterprise value. Business consolidation and unique operating models create some challenges in identifying comparator companies. Accordingly, we take a broad view of comparability to include organizations that are similar to Williams. This results in compensation that is appropriately scaled and reflects comparable complexities in business operations. We typically aim for a comparator group of 15 to 20 companies so our comparisons will be valid. The 2020 comparator group includes 16 companies which comprise a mix of both direct business competitors and companies with whom we compete for talent. Since 2017, the Committee utilizes a smaller targeted comparator company group for the purposes of measuring relative TSR related to our performance-based RSU awards. While not perfectly aligned to our natural gas strategy, these selected companies are more similar to our specific segment of the energy industry.

How We Use Our Comparator Group

We refer to publicly available information to analyze our comparator companies’ practices including how pay is divided among long-term incentives, annual incentives, base pay, and other forms of compensation. This allows the Committee to ensure competitiveness and appropriateness of proposed compensation packages. When setting pay, the Committee uses market median information of our comparator group, as opposed to market averages, to ensure that the impact of any unusual events that may occur at one or two companies during any particular year is diminished from the analysis. If an event is particularly unusual and surrounded by unique circumstances, the data is completely removed from the assessment. The smaller targeted comparator company group is used solely for the purposes of measuring relative TSR related to our performance-based RSU awards.

 

    

 

 

  

 

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The following table shows the range of our 2020 executive compensation benchmarking comparator companies’ assets, market capitalization, and enterprise value as originally reported for 2019 (dollars in millions):

 

    Comparator Company    Ticker    Total Assets   

Market

Capitalization

   Enterprise Value    

CenterPoint Energy Inc.

   CNP    $35,439    $13,668    $30,464

Cheniere Energy Inc.

   LNG    $35,492    $15,487    $46,720

Devon Energy Corp.

   DVN    $13,717    $9,921    $13,130

Dominion Energy Inc.

   D    $103,823    $69,403    $112,061

Enbridge (in U.S. dollars)

   ENB    $125,804    $80,560    $139,282

Enterprise Products Partners

   EPD    $61,733    $61,649    $90,361

EOG Resources

   EOG    $37,125    $48,741    $52,688

Magellan Midstream Partners, L.P.

   MMP    $8,438    $14,360    $19,178

Marathon Petroleum Corp.

   MPC    $98,556    $39,102    $78,305

ONEOK Inc.

   OKE    $21,812    $31,270    $43,998

Phillips 66

   PSX    $58,720    $49,132    $62,801

Pioneer Natural Resources

   PXD    $19,067    $25,059    $27,595

Sempra Energy

   SRE    $65,665    $44,232    $74,537

Southern Company

   SO    $118,700    $70,006    $121,262

Targa Resources Corp.

   TRGP    $18,815    $9,507    $21,541

TC Energy Corp. (in U.S. dollars)

   TRP    $76,498    $49,986    $92,136
   75th percentile    $82,012    $52,902    $90,805
   50th percentile    $47,922    $41,667    $57,744
   25th percentile    $21,126    $15,205    $29,746

Williams

   WMB    $46,040    $28,749    $53,993
   Percent Rank    49%    37%    48%

The Committee determined the same 16 companies listed in the table above will be used to benchmark compensation practices and pay decisions in 2020 and 2021.

A separate comparator company group is used to specifically measure relative TSR as it pertains to performance-based RSU awards since 2017:

 

·  Enbridge

  

·  Kinder Morgan, Inc.

  

·  Targa Resources Corp.

·  Energy Transfer

  

·  ONEOK Inc.

  

·  TC Energy Corp.

·  Enterprise Products Partners

  

·  Plains All-American  Pipeline

  

·  Western Midstream Partners

 

    

 

 

 

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OUR PAY SETTING PROCESS

During the first quarter of the year, the Committee completes a review to ensure we are paying competitively, equitably, and in a way that encourages and rewards performance.

The compensation data of our comparator group, disclosed primarily in proxy statements, is the primary market data we use when benchmarking the competitive pay of our NEOs. Aggregate market data obtained from recognized third-party executive compensation survey companies is used to supplement and validate comparator group market data.

 

 

Although the Committee reviews relevant data as it determines compensation packages, other considerations are taken into account. Because market data alone does not reflect the strategic competitive value of various roles within our Company, internal pay equity is also considered when making pay decisions. Other considerations when making pay decisions for the NEOs include individual experience, sustained performance, historical pay, realized and realizable pay over three years, tally sheets that include annual pay and benefit amounts, wealth accumulated over the past five years, and the total aggregate value of the NEOs’ equity awards and holdings.

   

 

Multiple internal and
external factors are
considered when
determining NEO
compensation packages.

 

When setting pay, we determine an annual target pay mix (distribution of pay among base pay, short-term incentives, annual long-term incentives, and other forms of compensation) for the NEOs. Consistent with our pay-for-performance philosophy, the actual amounts paid, excluding benefits, are determined based on Company and individual performance. Because performance is a factor, the target versus actual pay mix will vary, specifically as it relates to the annual cash incentives and long-term incentives.

 

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HOW WE DETERMINE THE AMOUNT FOR EACH TYPE OF PAY

Base pay, annual cash incentives, and long-term incentives accomplish different objectives. The table below illustrates a summary of the primary objectives associated with each component of pay listed in the order of most significant to the NEO’s total compensation. The table is followed by specific details regarding each pay component.v

 

   
Type of Pay & Form   

Performance Period  

(years)

   Objectives

Fixed

   Base pay (cash)    1   

 

· Compensates for carrying out the duties of the job

 

· Recognizes individual experiences, skills, and sustained performance

 

· Provides attraction and retention

 

 

At Risk

  

Short-term incentive:

Annual cash incentive

   1   

 

· Incents the accomplishment of annual business goals

 

· Aligns interests of executives to our stockholders

 

· Provides attraction and retention

 

  

 

Long-term incentive:

Performance-based RSUs

 

   3   

 

· Incents the accomplishment of long-term sustainable business goals

 

· Aligns interests of executives to our stockholders

 

· Promotes ownership in the Company

 

· Provides attraction and retention

  

 

Long-term incentive:

Time-based RSUs

   3

Base Pay

Base pay compensates the NEOs for carrying out the duties of their jobs and serves as the foundation of our pay program. Most other major components of pay are set based on a relationship to base pay, including long-term and annual incentives, as well as retirement benefits.

Base pay for the NEOs, including the CEO, is set considering the market median, with potential individual variation from the median due to experience, skills, and sustained performance of the individual as part of our pay-for-performance philosophy. Performance is measured in two ways. First, through the achieved results associated with attaining their annual goals, operational and/or functional area strategies, and personal development plans. Second, we also evaluate the NEOs’ observable skills and behaviors related to how they achieved their goals based on our defined competencies that contribute to workplace effectiveness and career success.

Annual Cash Incentives

As previously mentioned in the “Our Commitment to Pay for Performance” section, we pay annual cash incentives to encourage and reward our NEOs for making decisions that improve our annual operating performance through our Annual Incentive Program (“AIP”). The objectives of our AIP are to:

 

  Offer sufficient incentive compensation to motivate management to put forth extra effort, take prudent risks, and make effective decisions to maximize stockholder value;

 

  Motivate and incent management to choose strategies and investments that maximize long-term stockholder value;

 

  Provide sufficient total compensation to retain management; and

 

  Limit the cost of compensation to levels that will maximize the return of current stockholders without compromising the other objectives.

 

 

 

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NEOs’ AIP business performance is based on enterprise results of these business metrics in relation to established targets. We only use enterprise-level performance metrics for our NEOs in order to promote teamwork and collaboration by creating a shared goal for the overall Company performance. Our business performance targets are established utilizing the annual financial plan. Goals related to ROCE growth and operating margin improvement are considered when establishing the financial plan. Our incentive program allows the Committee to make adjustments to these business performance metrics to reflect certain business events. When determining which adjustments are appropriate, we are guided by the principle that incentive payments should not result in unearned windfalls or impose undue penalties. In other words, we make adjustments to ensure NEOs are not rewarded for positive results they did not facilitate nor are they penalized for certain unusual circumstances outside their control. Adjustments applied in 2020 to Adjusted EBITDA and Controllable Cost performance results in total reduced the 2020 AIP business performance result by one percent.

Management reviews with the Committee a supplemental scorecard reflecting Adjusted EBITDA, maintenance capital expenditures, distributable cash flow, Adjusted EPS, ROCE, and Williams stock price performance to provide an update regarding the Company’s performance as well as to ensure alignment between these measures and the AIP’s business performance metrics. This scorecard provides the Committee with additional data to assist in determining final AIP awards.

The Committee’s independent compensation consultant annually compares our relative performance on various measures, including TSR and earnings per share with our comparator group of companies. The Committee also uses this analysis to validate the reasonableness of our AIP results.

How We Set the 2020 AIP Goals.

 

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The AIP Calculation. The 2020 AIP is based on the weighted measures of Adjusted EBITDA, controllable costs, and ESG metrics. Each metric is directly aligned with our business strategy to operationally grow the business, operate safely in everything we do, and continue to align with our dividend growth strategy.

 

 
Business Performance
Metric & Weighting
  Measuring    Importance
   

    50%        

 

Adjusted

EBITDA

  Profit Metric   

·  Maintains a focus on generating expected levels of annual profit

   

40%        

  Controllable   Costs  

Operating & Maintenance (“O&M”) and

General & Administrative (“G&A”) Costs

  

·  Encourages cost management discipline with achieving our business strategy

   

10%        

  ESG  

·  Environmental: Loss of Primary Containment Events

 

·  Safety: High Potential Near Miss to Incident Ratio

  

·  Drives frontline employee action to address environmental and safety opportunities

 

·  Emphasizes importance of environmental and safety leadership and improvement

The attainment percentage of AIP goals results in payment of annual cash incentives along a continuum between threshold and stretch levels, which corresponds to 0 percent through 200 percent of the NEOs’ annual cash incentive target.

2020 NEO AIP Targets. The starting point to determine annual cash incentive targets (expressed as a percentage of base pay) is competitive market information referencing the market median, which provides an idea of what other companies target to pay in annual cash incentives for similar jobs. We also consider the internal value of each job (i.e., how important the job is to execute our strategy compared to other jobs in the Company) before the target is set for the year. The annual cash incentive targets as a percentage of base pay for the NEOs in 2020 were as follows:

 

  Position    Target     

  President and Chief Executive Officer

       130%     

  EVP, Chief Operating Officer

       110%     

  SVP, Corporate Strategic Development

       85%     

  SVP, Chief Financial Officer

       90%     

  SVP, Gathering and Processing

       75%     

  

 

 

 

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Determining 2020 AIP Awards. To determine the funding of the annual cash incentive, we use the following calculation for each NEO:

 

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Based on business performance relative to the established goals, the Committee certified business performance results as 140 percent of target as follows.

 

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 Metrics    Weighting    Threshold    Target   

Stretch

@ 200%

   Actual    Result    Payout %    

 Adjusted EBITDA

       50%        $4,825        $5,025        $5,265        $5,118        139%        69%    

 Controllable Costs

       40%        $(2,135)        $(1,935)        $(1,735)        $(1,815)        160%        64%    

 ESG - Environmental:

 Loss of Primary Containment Events

       5%        < 0.0%        30.0%        > 60%        4.6%        15%        1%    

 ESG - Safety:

 Potential Near Miss to Incident Ratio

       5%        < 3.0:1       
> 6.0:1
but  <  9.0:1

       > 14.0:1       
> 9.0:1 but
< 11.0:1

       125%        6%    

 2020 AIP Business Performance %

                                     140%    

While the calculated result was 140 percent of target, to offset the impact of a 27th bi-weekly paycheck on AIP eligible earnings in 2020, the amount funded for the 2020 AIP award payout was 135 percent of target. This award was paid in March 2021. It’s important to note that our metrics and associated targets were approved as part of our normal annual process and were not adjusted due to COVID or other challenges.

 

      

 

 

  

 

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We calculate (a) Adjusted EBITDA as: Gross margin less operating and maintenance expenses, less selling, general and administrative expenses, less other (income) and expense, plus proportionate EBITDA of joint venture partnerships; and (b) Controllable Costs as: operating and maintenance costs and selling, general and administrative costs that are under the responsibility of a cost center manager, less certain expenses that are considered less controllable (such as pension and postretirement benefit costs) or have no net impact on financial performance (such as costs that are passed directly to customers). Operating and maintenance costs, selling, general and administrative costs, and total service revenues include our proportional ownership share of such items recognized by certain equity method investees.

The 2020 controllable cost target was established at a level consistent with 2019 results. The target is just $2 million above 2019, or within one-tenth of one-percent. While broader costs were reduced or remained flat, the slight increase in the target considered the incremental costs of operating assets associated with growth projects completed or operating during 2020.

For 2020, we utilized two ESG metrics including an environment metric Loss of Primary Containment (“LOPC”) and a safety metric High Potential Near Miss to Incident Ratio. The LOPC metric focuses on environmental performance, the reduction of greenhouse gas emissions, and is aligned to our core value of being responsible stewards around the environment and the products we transport. The metric is considered a leading indicator to more significant process safety incidents and is directly related to reducing greenhouse gas emissions. The High Potential Near Miss to Incident Ratio was new in 2020 and was a modification of our previous metric Near Miss to Incident Ratio utilized in 2018 and 2019. The new metric places an emphasis on identifying situations that could lead to severe incidents and preventing them from occurring. The environmental metric is on a payout curve while the safety metric utilizes established tiers, in 25 percent increments, from the threshold to stretch payout opportunity.

Individual performance, such as success toward our strategic objectives and individual goals, and successful demonstration of the Company’s leadership competencies which exceeded expectations may be recognized through adjustments. Payments may also be adjusted downward if performance warrants. The Committee chose to apply an adjustment to certain NEOs. In total, the adjustments applied to NEO awards were one percent of the original calculated awards.

2021 AIP Design. In the 2021 AIP, Adjusted EBITDA and Controllable Costs will continue to be weighted at 50 percent and 40 percent, respectively. The Environmental Performance Metric, LOPC, and the Safety Performance Metric, High Potential Near Miss to Incident Ratio, will each be weighted at 5 percent each. The Environmental Performance Metric was new in 2020 and continues our focus on environmental performance, the reduction of greenhouse gasses, and is aligned with our core value of being responsible stewards around the environment and the products we transport. The LOPC metric is considered a leading indicator to more significant process safety incidents and is directly related to reducing greenhouse gas emissions.

 

 

  2021 AIP Metrics

 

  

 

Weight      

 

 

  Adjusted EBITDA

     50%        

  Controllable Costs

     40%        

  ESG (10%)

  

  – Environmental Performance Metric

     5%        

  – Safety Performance Metric

     5%        

Long-Term Incentives

To determine the value for long-term incentives granted to a NEO each year, we consider the following factors:

 

  The proportion of long-term incentives relative to base pay;

 

  The NEO’s impact on Company performance and ability to create value;

 

  Long-term business objectives;

 

  The market median and specific awards made to executives in similar positions within our comparator group of companies;

 

  The market demand for the NEO’s particular skills and experience;

 

  The amount granted to other NEOs in comparable positions at the Company;

 

  The NEO’s demonstrated historical performance; and

 

  The NEO’s leadership performance.

A summary of the long-term incentive program details for 2020 are shown in the following table. The long-term incentive mix for the CEO differs from the mix for the other NEOs. Since the CEO has more opportunity to influence our financial results, the Committee considers it appropriate that a greater percentage of his long-term incentives are directly tied to performance and the Company stock price.

 

 

 

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     Performance-based RSUs    Time-based RSUs     

  CEO Equity Mix

   60%    40%   

  NEO Equity Mix

   50%    50%   

  Term

   Three years    Three years   

  Frequency

   Granted annually    Granted annually   

  2020 Performance Criteria

   ROCE and Debt to EBITDA Ratio
with Relative TSR as a modifier
   Retention   

  Vesting

   Cliff vesting after three years    Cliff vesting after three years   

  Payout

   Upon vesting, shares are distributed based
on performance certification (0% - 200%)
   Upon vesting, shares are distributed   

  Dividends

   No dividends    Dividend equivalents accrued
and paid in cash upon vesting
  

When stock options were eliminated from our annual equity award mix after 2018, the performance-based RSU award increased to 60 percent and 50 percent of our CEO’s and NEO’s equity mix respectively. The long-term incentive mix has been the same in 2019, 2020, and 2021.

Performance-based RSUs. Performance-based RSU awards are only earned if we attain specific pre-determined performance results. The 2017 performance-based RSU awards utilize relative TSR while the 2018 and 2019 performance-based RSU awards utilize both relative TSR and ROCE to determine performance and the actual number of units that will vest. The 2020 performance-based RSU awards utilize ROCE and Debt to EBITDA Ratio to determine performance and apply relative TSR as a performance modifier.

2017 Performance-based RSUs. The performance cycle for our 2017 performance-based RSUs was completed at the end of 2019 and vested in February 2020. The 2017 award measured our TSR performance relative to our established peer group. The design provides for up to a 200 percent payout if our relative TSR performance is at the top of our peer group and no payout if our relative TSR performance is at the bottom of the peer group. The payout curve is linear between 0 percent and 200 percent based on our placement within the peer group of companies. An award is limited to 100 percent if our actual TSR is negative. Williams TSR during this period placed eighth among our peer companies resulting in an earned payout of just 44.4 percent of the number of performance-based RSUs originally granted. This resulted in 55.6 percent of the original RSUs awarded being cancelled.

2018 Performance-based RSUs. The 2018 performance-based RSUs utilize two equally weighted metrics to measure performance and can result in a payout range from 0 percent to 200 percent of target. Relative TSR is weighted at 50 percent and ROCE is weighted at 50 percent. Relative TSR, consistent with the 2017 award described above, provides for up to a 200 percent payout if our relative TSR performance is at the top of our peer group and no payout if our relative TSR performance is at the bottom of the peer group. The payout curve is linear between 0 percent and 200 percent based on our placement within the peer group of companies, unless the TSR result is negative and the metric would be limited to 100 percent. Williams TSR during this period placed sixth among our peer companies resulting in an earned payout, subject to weighting, of 88.9 percent of target. The ROCE performance was measured against pre-determined targets and was on a linear payout curve from 50 percent to target and from target to 200 percent.

 

  2018 Performance-based RSU Metric      Weighting    Threshold      Target      Stretch      Actual      Result     

  2020 ROCE

     50%    6.25%      7.00%      7.50%      7.40%      180%   

The 2018 performance-based award, which vested in February 2021, distributed 134.4 percent of the targeted number of RSUs awarded.

 

  2018 Performance-based RSU Metric    Weighting          Metric Result          Weighted Result    

  Relative Total Shareholder Return (TSR)

   50%        88.9%                 44.4%       

  Return on Capital Employed (ROCE)

   50%                 180.0%        90.0%  

  Final Result

                 134.4%  

This is the first above target performance-based award since the 2012 award vested in 2015.

 

  

 

 

  

 

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2019 Performance-based RSUs. The 2019 performance-based RSUs utilize two equally weighted metrics to measure performance and can result in a payout range from 0 percent to 200 percent of target. Relative TSR is weighted at 50 percent and ROCE is weighted at 50 percent. The measurement of the 2019 award is consistent with the design of the 2018 award described above. The performance-period for the 2019 award will be complete at the end of 2021 and any earned award would vest and distribute in February 2022.

 

  2019 Performance-based RSU Metric        Weighting              Threshold              Target              Stretch        

  2021 ROCE

   100%      7.30%      8.20%      8.70%       

This ROCE target represents approximately an eight percent compounded annual growth rate from 2018 results and is aligned with the financial plan approved by the Board.

2019 Special Performance-based RSU Award. At the time of 2019 annual equity award, the five NEOs received an incremental performance-based equity award. This award measures 2021 Adjusted Earnings Per Share (“EPS”) against preestablished targets. While the performance period ends on December 31, 2021, any earned award would vest in 50 percent increments three and four years from the date of the award, in February 2022 and February 2023, respectively. While the award is performance-based, the extended vesting period was added for retentive purposes. Prior to the 2019 award, six of the nine recipients of this award had been an executive officer with the Company for less than two years. Considering the progress associated with the reconstituted leadership group, the Committee sought to provide a common retentive award across the group while building in more significant retention.

 

  2019 Special Performance-based RSU Metric        Weighting              Threshold              Target              Stretch        

  2021 Adjusted EPS

   50%      $0.99      $1.07      $1.23       

This Adjusted EPS target represents approximately a 35 percent total growth rate from 2018 Adjusted EPS results.

2020 Performance-based RSU Awards. The 2020 performance-based RSU awards, granted on February 24, 2020, utilize two equally weighted metrics to measure performance and can result in a payout range from 0 percent to 200 percent of target. ROCE is weighted at 50 percent and Debt to EBITDA Ratio is weighted at 50 percent and both are measured against preestablished targets. Additionally, the calculated result from these weighted financial metrics may be increased or decreased by 25 percent of the calculated result utilizing a relative TSR metric. If our TSR relative to our peer company group is in the top three companies, the calculated result will be increased by 25 percent, while the calculated result will be decreased by 25 percent if our TSR relative to our peer company group is in the bottom three companies. However, under no circumstance can the calculated award exceed 200 percent of target. The metrics and associated targets for our 2020 awards were approved as part of our normal annual process and were not adjusted due to COVID or other challenges.

 

  2020 Performance-based RSU Metrics          Weighting                Threshold                Target              Stretch         

  2022 ROCE

   50%    7.30%    7.50%   8.00%     

  2022 Debt to EBITDA Ratio

   50%    4.40x    4.20x   4.00x  

  Relative TSR

   Modifier may increase or decrease result by 25%  

2021 Performance-based RSU Awards. The 2021 performance-based RSU awards, granted on February 24, 2021, utilize two equally weighted metrics to measure performance against preestablished targets and can result in a payout range from 0 percent to 200 percent of target. ROCE and Available Funds from Operations (“AFFO”) per share are each weighted at 50 percent. Due to the strong improvement in our Debt to EBITDA ratio as we are approaching our corporate target, this 2020 award metric is not utilized in the 2021 awards. Additionally, consistent with the 2020 awards, relative TSR is utilized as a modifier and the calculated result from these weighted financial metrics may be increased or decreased by 25 percent.

Time-based RSU Awards. We grant time-based RSUs to retain executives and to facilitate stock ownership. The use of time-based RSUs is also consistent with the practices of our comparator group of companies. Time-based RSUs accrue dividend equivalents which will be paid in cash only upon vesting and distribution of the award.

Stock Option Awards. For recipients, stock options have value only to the extent the price of our common stock is higher on the date the options are exercised than it was on the date the options were granted. Beginning in 2019, stock options are no longer part of our annual equity award mix and were not granted in 2019, 2020, or 2021.

Grant Practices. The Committee typically approves our annual equity grant in February of each year, shortly after the annual earnings release to ensure the market has time to absorb material information disclosed in the earnings release and reflect that information in the stock price. The grant date for off-cycle grants for individuals who are not NEOs, for reasons such as retention or new hires, is generally the first business day of the month following the approval of the grant. By using this consistent approach, we remove grant timing from the influence of the release of material information.

  

 

 

 

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Stock Ownership Guidelines. Our program provides stock ownership guidelines for each of our NEOs and our Board of Directors as shown in the table below:

 

  Position    Ownership Multiple    As a Multiple of    Holding/Retention Requirement    

  CEO

   6x    Base Pay    50%, after taxes, until guidelines are met    

  NEO

   3x    Base Pay    50%, after taxes, until guidelines are met    

  Board of Directors                 

   5x    Annual Cash Retainer    60% until guidelines are met    

The Committee annually reviews the guidelines for competitiveness and alignment with best practices and monitors the NEOs’ progress toward compliance. WMB shares owned outright and outstanding time-based RSUs count as owned for purposes of the program. Stock options and performance-based equity are not included as owned for purposes of the program. NEOs must retain 50 percent of any vested equity awards, net of taxes, until their ownership guidelines are met. Board members must retain 60 percent of distributed vested equity awards until their ownership guidelines are met. At Williams, NEOs must hold at least 50 percent of any equity transaction if they have not met their ownership guideline regardless of their time in the role.

 

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Benefits

Consistent with our philosophy to emphasize pay for performance, our NEOs receive very few perquisites or supplemental benefits. They are as follows:

 

  Retirement Restoration Benefits. NEOs participate in our qualified retirement program on the same terms as our other employees. We offer a retirement restoration plan to maintain a proportional level of pension benefits to our NEOs as provided to other employees. The Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), limits qualified pension benefits based on an annual compensation limit. For 2020, the limit was $285,000. Any limitation in a NEO’s pension benefit in the tax-qualified pension plan due to this limit is made up for (subject to a cap) in the unfunded retirement restoration plan. Benefits for NEOs are not enhanced and are calculated using the same benefit formula as that used to calculate benefits for employees in the qualified pension plan. The compensation included in the retirement restoration benefit is consistent with pay considered for employees in the qualified pension plan. Equity compensation, including RSUs and stock options, is not considered. Additionally, we do not provide a nonqualified benefit related to our qualified 401(k) defined contribution retirement plan.

 

  Financial Planning Allowance. We offer financial planning to provide expertise on current tax laws to assist NEOs with personal financial planning and preparations for contingencies such as death and disability. Covered services include estate planning, tax planning, tax return preparation, wealth accumulation planning, and other personal financial planning services. In addition, by working with a financial planner, NEOs gain a better understanding of and appreciation for the programs the Company provides, which helps to maximize the retention and engagement aspects of the dollars the Company spends on these programs.

 

  Personal Use of Company Aircraft. The CEO is allowed, but not required, to use the Company’s private aircraft for personal travel. Our policy for all other executive officers is to discourage personal use of the aircraft, but the CEO retains discretion to permit its use when deemed appropriate, such as when the destination is not well served by commercial airlines, personal emergencies, and the aircraft is not being used for business purposes. To the extent that NEOs use the Company’s private aircraft for personal travel, imputed income will be applied to the NEO, in compliance with Internal Revenue Code requirements.

 

  Executive Physicals. The Committee requires annual physicals for the NEOs. Such physicals align with our wellness initiative as well as assist in mitigating risk. NEO physicals are intended to identify any health risks and medical conditions as early as possible in an effort to achieve more effective treatment and outcomes.

 

  Event Center. We have a suite and club seats at certain event centers that were purchased for business purposes. If they are not being used for business purposes, we make them available to all employees, including our NEOs. This is not considered a perquisite to our NEOs because it is available to all employees.

  

 

 

 

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Additional Components of Our Executive Compensation Program

In addition to establishing the pay elements described above, we have adopted a number of policies to further the goals of the executive compensation program, particularly with respect to strengthening the alignment of our NEOs’ interests with stockholder long-term interests.

Employment Agreements. Williams does not have employment agreements with our NEOs.

Termination and Severance Arrangements. The Executive Severance Pay Plan includes senior executive officers, which includes NEOs other than the CEO, in order to define a consistent approach of treatment in the event of a severance event. Under the plan, NEOs are eligible to receive a discretionary payment of 1.5 to 2.0 times the sum of the NEOs base salary and target annual bonus. Any severance payment is discretionary. Considerations include the NEO’s term of employment, past accomplishments, reasons for separation from the Company, and competitive market practice. The NEO can elect coverage under the Company’s medical benefits plans for 18 months from the termination in the same manner and at the same cost as similarly situated active employees for up to the first 12 months. Outplacement services are provided up to a maximum amount of $25,000.

Change in Control Agreements. Our change in control agreements, in conjunction with the NEOs’ equity award agreements, provide separation benefits for our NEOs. Our program includes a double trigger for benefits and equity vesting. This means there must be a Company change in control and the NEO must experience a qualifying termination of employment prior to receiving benefits under the agreement. This practice creates security for the NEOs but does not provide an incentive for the NEO to leave the Company. Our program is designed to encourage the NEOs to focus on the best interests of stockholders by alleviating their concerns about a possible detrimental impact to their compensation and benefits under a potential change in control, not to provide compensation advantages to NEOs for executing a transaction.

Our Committee reviews our change in control benefits periodically to ensure they are consistent with competitive practice and aligned with our compensation philosophy. As part of the review, calculations are performed to determine the overall program cost to the Company if a change in control event were to occur and all covered NEOs were terminated as a result. An assessment of competitive norms, including the reasonableness of the elements of compensation received, is used to validate benefit levels for a change in control. We do not offer a tax gross-up provision in our change in control agreements but instead include a ‘best net’ provision providing our NEOs with the better of their after-tax benefit capped at the safe harbor amount or their benefit paid in full, subjecting them to possible excise tax payments. The Committee continues to believe that offering a change in control program is appropriate and critical to attracting and retaining executive talent and keeping them aligned with stockholder interests in the event of a change in control.

  

 

 

  

 

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The following chart details the benefits received if a NEO were to be terminated or resigned for a defined good reason following a change in control as well as an analysis of those benefits as it relates to the Company, stockholders, and the NEO:

 

Change in Control Benefit   

What does the benefit provide to  the

Company and stockholders?

  

What does the benefit

provide to the NEO?

Multiple of 3x base pay plus

annual cash incentive at target

  

Encourages NEOs to remain engaged

and stay focused on successfully

closing the transaction.

  

Financial security for the NEO equivalent to

three-years of continued employment.

Accelerated vesting of stock awards

  

An incentive to stay during and after a

change in control. If there is risk of forfeiture,

NEOs may be less inclined to stay

or to support the transaction.

  

The NEOs are kept whole if they

have a separation from service

following a change in control.

The value of 36 months of group

medical, dental, and/or

prescription drug plan benefits

  

This is a minimal cost to the Company that

creates a competitive benefit.

   Access to health coverage.

Reimbursement of legal

fees to enforce benefit

  

Keeps NEOs focused on the Company and

not concerned about whether the acquiring

company will honor contractual commitments

after a change in control.

  

Security during an

unstable period of time.

Outplacement assistance

  

Keeps NEOs focused on supporting the

transaction and less concerned about

trying to secure another position.

  

Assists NEOs in finding a

comparable executive position.

‘Best Net’ provision

  

Enables the change in control benefits

to be delivered in as close a manner to the

intended value of the benefits as possible.

  

Provides NEOs with the better of their after-tax

benefit capped at the safe harbor amount or

their benefit paid in full, which would subject

them to possible excise tax payments.

Derivative Transactions. Our policy on securities trading applies to transactions in positions or interests whose value is based on the performance or price of our common stock. Because of the inherent potential for abuse, Williams prohibits officers, directors, and certain other employees from entering into short sales or using equivalent derivative securities in connection with Williams’ or its affiliates’ securities. Our policy on securities trading also prohibits holding Williams’ or its affiliates’ securities in a margin account or pledging them as collateral for a loan.

MITIGATING RISK

Although no compensation-related risk was identified as a top risk, the approach to determine if there were adverse compensation risks is similar to the process detailed in the “Corporate Governance and Board Matters – Corporate Governance – Board Oversight of Williams’ Risk Management Process” section of this proxy statement. After this review and analysis, it was determined we do not have material adverse compensation-related risks. Our compensation plans are effectively designed and function to reward positive performance and motivate NEOs and employees to behave in a manner consistent with our stockholder interests, business strategies and objectives, ethical standards, and prudent business practices, along with our Core Values which are the foundation on which we conduct business. Our Core Values can be found on our website at www.williams.com from the Our Company tab. In fact, many elements of our executive pay program serve to mitigate excessive risk taking. For example:

Target Pay Mix. The target pay mix weighting of long-term incentives, annual cash incentives, and base pay is consistent with comparator company practices and avoids placing too much value on any one element of compensation, particularly the annual cash incentive. The mix of our pay program is intended to motivate NEOs to consider the impact of decisions on stockholders in the long-, intermediate-, and short-terms.

Annual Cash Incentive. Our annual cash incentive program does not allow for unlimited payouts. Calculated cash incentive payments for NEOs cannot exceed 200 percent of target levels.

  

 

 

 

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Performance-based Awards

 

  Our annual cash incentive and long-term incentive programs include performance-based awards. The entire annual cash incentive award is measured against performance targets, while a significant portion of the long-term equity awards provided to NEOs is in the form of performance-based RSUs. Performance-based RSUs have no value unless we achieve pre-determined performance target thresholds.

 

  To drive a long-term perspective, all 2020 RSU awards vest no earlier than three years from the date of grant rather than vesting ratably on an annual basis. Additionally, any earned cash dividend equivalents on time-based RSUs are not paid until the officer meets the vesting requirements and the award is distributed. Cash dividend equivalents are not provided on performance-based RSU awards.

 

  NEOs’ incentive compensation performance is measured at the enterprise level rather than on a business unit level to ensure a focus on the overall success of the Company.

Stock Ownership Guidelines. As discussed in this CD&A, all NEOs, consistent with their responsibilities to stockholders, must hold an equity interest in the Company equal to a stated multiple of their base pay.

Recoupment Policy. In the event that financial results of the Company are restated due to fraud or intentional misconduct, the Board will review any performance-based incentive payments, including payments under the AIP and performance-based RSUs, paid to executive officers, who are found by the Board to be personally responsible for the fraud or intentional misconduct that caused the need for the restatement and will, to the extent permitted by applicable law, seek recoupment from all executive officers of any amounts paid in excess of the amounts that would have been paid based on the restated financial results. In addition, the Company will take action 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.

Insider Trading Policy. Our insider trading policy prohibits NEOs and directors, directly or through family members or other persons or entities, from buying or selling Williams’ securities or engaging in any other action to take personal advantage of material nonpublic information. In addition, if during the course of working for the Company, the NEO or director learns of material nonpublic information about a competitor or a company with which Williams or an affiliate of Williams does or anticipates doing business with, he/she may not trade in that company’s securities until the information becomes public or is no longer material.

ACCOUNTING AND TAX TREATMENT

We consider the impact of accounting and tax treatment when designing all aspects of pay, but the primary driver of our program design is to support our business objectives. Prior to 2018 and the implications of the tax reform legislation in late 2017, stock options and performance-based RSUs were intended to satisfy the requirements for performance-based compensation as defined in Section 162(m) of the Internal Revenue Code and are therefore considered a tax-deductible expense. Time-based RSUs did not qualify as performance-based and may not be fully deductible.

    

 

 

  

 

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COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT ON EXECUTIVE COMPENSATION

We have reviewed and discussed the foregoing CD&A with management. Based on our review and discussions with management, we recommend to the Board that the CD&A be included in this proxy statement.

By the members of the Committee of the Board as of March 18, 2021:

 

  Stephen W. Bergstrom

 

  Nancy K. Buese

 

  Rose M. Robeson

 

  Scott D. Sheffield

 

  Murray D. Smith

 

  William H. Spence

The Committee Report on Executive Compensation is not deemed filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by Williams under the Securities Act or the Exchange Act, except to the extent that Williams specifically incorporates such information by reference.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal year 2020, Stephen W. Bergstrom, Nancy K. Buese, Rose M. Robeson, Scott D. Sheffield, Murray D. Smith, and William H. Spence served on the Compensation and Management Development Committee. None of these Committee members has ever been an officer or employee of the Company or any of our subsidiaries, and none has an interlocking relationship requiring disclosure under applicable SEC rules.

  

 

 

 

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2020 SUMMARY COMPENSATION TABLE

The following table sets forth certain information with respect to the compensation of the NEOs earned during fiscal years 2020, 2019, and 2018:

 

 

Name and

Principal Position

 

  

Year

 

      

Salary

(1)

 

    

Bonus

(2)

 

    

Stock Awards

(3)

 

    

Option Awards

(4)

 

    

Non-Equity

Incentive Plan

Compensation

(5)

 

    

Change in

Pension Value

& Nonqualified

Deferred
Compensation

Earnings

(6)

 

    

All Other

Compensation
(7)

 

    

Total

 

 
 

Alan S. Armstrong

     2020          $1,335,577        $ –        $7,500,010        $ –        $2,343,938        $943,581        $48,852        $12,171,958      

President and Chief

     2019          1,218,943               $10,251,117               1,854,012        2,241,482        24,785        15,590,338      

Executive Officer

     2018          1,184,615               6,180,144        1,270,144        2,028,654               27,818        10,691,376      
 

Micheal G. Dunn

     2020          722,116               3,299,993               1,126,000        344,830        98,412        5,591,351      

EVP, Chief

     2019          670,673               4,691,701               780,000        426,174        42,761        6,611,309      

Operating Officer

     2018          642,308               2,821,494        599,124        830,000        168,870        36,277        5,098,072      
 

Chad J. Zamarin

     2020          593,269               2,500,003               681,000        201,227        20,228        3,995,728      

SVP, Corporate

     2019          552,404        500,000        3,420,247               485,000        292,790        18,216        5,268,657      

Strategic Development

     2018          537,692               2,069,118        439,359        590,000        54,786        24,574        3,715,530      
 

John D. Chandler

     2020          598,462               2,100,006               727,000        312,980        23,743        3,762,190      

SVP, Chief

     2019          556,539               3,323,615               540,000        328,699        23,216        4,772,069      

Financial Officer

     2018          537,692               2,069,118        439,359        590,000        41,212        17,916        3,695,298      
 

Walter J. Bennett

     2020          486,635               1,500,002               492,700        176,831        23,445        2,679,613      

SVP, Gathering

     2019                                                           –      

& Processing

     2018                                                           –      

 

(1)

Salary. Due to a payroll timing issue, the 2020 salary includes a 27th bi-weekly paycheck issued in the calendar year.

 

(2)

Bonus. As part of Mr. Zamarin’s pay package to join the Company, he received a deferred cash payment in 2019. This award, and other elements of his pay package, were intended to address the significant retention that was in place with his previous employer.

 

(3)

Stock Awards. Awards were granted under the terms of the 2007 Incentive Plan and include time-based and performance-based RSUs. Amounts shown are the grant date fair value of awards computed in accordance with FASB ASC Topic 718. The assumptions used to value the stock awards can be found in our Annual Report on Form 10-K for the year-ended December 31, 2020.

The potential maximum values of the performance-based RSUs, subject to changes in performance outcomes, are as follows:

 

 

        Name

 

  

 

2020 Performance-based RSU Maximum Potential

 

        Alan S. Armstrong

   $9,000,013  

        Micheal G. Dunn

   3,300,000

        Chad J. Zamarin

   2,499,986

        John D. Chandler

   2,099,994

        Walter J. Bennett

   1,499,991

 

(4)

Option Awards. Prior to 2019, awards were granted under the terms of the 2007 Incentive Plan and include non-qualified stock options. Amounts shown are the grant date fair value of awards computed in accordance with FASB ASC Topic 718. The assumptions used to value the option awards can be found in our Annual Report on Form 10-K for the year-ended December 31, 2020.

 

(5)

Non-Equity Incentive Plan. The maximum annual incentive pool funding for NEOs is 200 percent of target. While the calculated result was 140 percent of target, to offset the impact of a 27th bi-weekly paycheck on AIP eligible earnings in 2020, the amount funded for the 2020 AIP award payout was 135 percent of target. This award was paid in March 2021.

 

(6)

Change in Pension Value and Nonqualified Deferred Compensation Earnings. The amount shown is the aggregate change from December 31, 2019 to December 31, 2020 in the actuarial present value of the accrued benefit under the qualified pension and non-qualified plan. A portion of the increase in the change in present value is due to the lower discount rate used to measure these benefits at the end of 2020. The underlying design of these programs as it pertains to these NEOs did not change from 2019 to 2020. Please refer to the “Pension Benefits” table for further details of the present value of the accrued benefit.

  

 

 

  

 

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(7)

All Other Compensation. Amounts shown represent payments made on behalf of the NEOs and include life insurance premiums, a 401(k)-matching contribution, relocation benefits, and perquisites (if applicable). Perquisites may include financial planning services, mandated annual physical exams and personal use of the Company aircraft. If the NEO used the Company aircraft, the incremental cost method is used to calculate the value of the personal use of the Company aircraft. The incremental cost calculation includes items such as fuel, maintenance, weather and airport services, pilot meals, pilot overnight expenses, aircraft telephone, and catering. Amounts do not include arrangements that are generally available to our employees and do not discriminate in scope, terms, or operations in favor of our NEOs, such as medical, dental, and disability programs.

 

    Mr. Armstrong received 401(k) matching contributions in the amount of $17,100; reimbursement of financial planning services of $10,000; personal usage of the Company aircraft in the amount of $18,920; and life insurance premiums.

 

    Mr. Dunn received 401(k) matching contributions in the amount of $17,100; reimbursement of financial planning services; reimbursement related to a mandated annual physical exam; personal usage of the Company aircraft in the amount of $1,419; relocation benefits in the amount of $66,868; and life insurance premiums.

 

    Mr. Zamarin received 401(k) matching contributions in the amount of $17,100; reimbursement related to a mandated annual physical exam; and life insurance premiums.

 

    Mr. Chandler received 401(k) matching contributions in the amount of $17,100; reimbursement of financial planning services; and life insurance premiums.

 

    Mr. Bennett received 401(k) matching contributions in the amount of $17,100; reimbursement of financial planning services; and life insurance premiums.

The Committee considers the compensation of CEOs from comparator companies when setting Mr. Armstrong’s pay. It is the competitive norm for CEOs to be paid more than other NEOs. In addition, the Committee believes the difference in pay between the CEO and other NEOs is consistent with our compensation philosophy (summarized in the CD&A), which considers the external market and internal value of each job to the Company along with the incumbent’s experience and performance of the job in setting pay. The CEO’s job is different from the other NEOs because the CEO has ultimate responsibility for performance results and is accountable to the Board and stockholders. Consequently, the Committee believes it is appropriate for the CEO’s pay to be higher.

  

 

 

 

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WILLIAMS 2021 PROXY STATEMENT          

 


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GRANTS OF PLAN BASED AWARDS

The following table sets forth certain information with respect to the grant of stock options, RSUs, and awards payable under the Company’s annual cash incentive plan during the last fiscal year to the NEOs:

 

     
  Name   

Grant

Date

    

Estimated Future Payouts

Under Non-Equity

Incentive Plan Awards (1)

    

Estimated Future Payouts

Under Equity

Incentive Plan Awards (2)

    

All Other
Stock

Awards:
Number of
Shares of
Stock  or
Units 
(3)

    

All Other

Option

Awards:
Number of
Securities
Underlying
Options

    

Exercise or

Base Price

of Option

Awards

    

Grant Date

Fair Value

of Stock

    and Option    

Awards

 
     
            Threshold    Target      Maximum          Threshold      Target      Maximum                                  
     
     2/24/2020        $ –      $1,736,250        $3,472,500                                $ –  
     

  Armstrong

     2/24/2020                            277,094        554,188                     4,500,007      
     
     2/24/2020                                147,059              3,000,004      
     
     2/24/2020          –      794,328        1,588,656                                  –  
     

  Dunn

     2/24/2020                            101,601        203,202                     1,650,000      
     
     2/24/2020                                80,882              1,649,993      
     
     2/24/2020          –      504,279        1,008,558                                  –  
     

  Zamarin

     2/24/2020                            76,970        153,940                     1,249,993      
     
     2/24/2020                                61,275              1,250,010      
     
     2/24/2020          –      538,616        1,077,232                                  –  
     

  Chandler

     2/24/2020                            64,655        129,310                     1,049,997      
     
     2/24/2020                                51,471              1,050,008      
     
     2/24/2020          –      364,976        729,952                                  –  
     

  Bennett

     2/24/2020                            46,182        92,364                     749,996      
     
       2/24/2020                                                            36,765