EQT Nominates Janet L. Carrig, James T. McManus II, and Valerie A. Mitchell to Board of DirectorsSource: Business Wire
- Adopts Universal Proxy Card for 2019 Annual Meeting
- Three Long-Serving Directors to Step Down from Board
- If Elected, the Majority of EQT’s Refreshed and Reconstituted Board Will Be New, Independent Directors Added Since 2018
Sends Letter to
Toby Ricein Response to Rice Director Nominations
In addition to the three new nominees, the EQT directors up for
reelection this year are
If the Company’s nominees are elected:
- the majority of EQT’s refreshed and reconstituted Board will be new, independent directors;
- nine of EQT’s 12 directors will have been elected since 2017;
- nine of EQT’s 12 directors will have direct oil and gas industry upstream experience;
- nine of EQT’s 12 directors will have CEO or CFO experience, six of whom with energy companies; and
- approximately 42% of the Board will be female directors.
The EQT Board intends to adopt a universal proxy card. Universal proxy
cards have been advocated for by the
The EQT Board of Directors issued the following statement:
Board refreshment is a priority for the new EQT, and we are pleased to
We are pleased to embrace an emerging best practice in corporate governance by approving the use of a universal proxy card for the 2019 Annual Meeting. We believe our decision to use a universal proxy card this year demonstrates that EQT is open-minded, values the feedback it has received through its extensive shareholder engagement, welcomes diverse perspectives in the boardroom and is committed to continually enhancing its governance practices.
EQT is delivering outstanding results, demonstrating the success of the
Company’s new leadership team and strategic plan – a result of our
efforts over the last year to implement tangible, significant and
value-creating change to responsibly, but meaningfully, disrupt the
status quo at EQT. EQT is now on the right track, and we are confident
that with the support of
As previously announced, the Company expects to generate approximately
In connection with determining the Company’s director slate for the 2019
Annual Meeting, the independent directors of the EQT Board sent the
following letter to
As the independent members of the Board of Directors (the “Board”) of
The Board has reviewed and considered your Nominees and concluded that the election ofyour slate of Nominees would not be in the best interests of EQT’s shareholders. Furthermore, we believe your proposals would immediately jeopardize shareholder value by destabilizing EQT’s continuing success in driving operational efficiencies and delivering sustainable free cash flow growth. We have detailed below important considerations regarding these matters:
EQT HAS TRANSFORMED, AND THE SUCCESS
OF THE NEW TEAM AND NEW STRATEGY IS EVIDENT
- EQT changed its CEO, CFO and General Counsel and now has hired a distinguished Chief Operating Officer to spearhead EQT’s commitment to operational excellence.
- EQT added four new directors in 2017, of which some have gone to Equitrans, and five new directors in 2018. If EQT’s three new director nominees are elected in 2019, a majority of the refreshed and reconstituted Board will be new, independent directors with a skill set closely aligned with the needs of our newly focused E&P business.
Before the spin-off, operational challenges resulted in a poor third
quarter in 2018. Shortly thereafter, new management acted swiftly,
announcing employee terminations and developing a rigorous, bottom-up
business plan unveiled in
January 2019(the “Cash Flow Plan”) that addressed shareholder feedback. Our recent financial and operational results show that we have addressed the legacy issues and are executing our Cash Flow Plan in a highly efficient manner.
Indeed, the results from the fourth quarter of 2018 and the first
quarter of 2019 demonstrate the benefits and success of the new plan.
In executing this plan, EQT has already increased production volumes,
delivered substantial operational efficiencies and reduced annual
$150 million, helping to drive meaningful free cash flow. Production volumes are increasing and cost savings are being realized, positioning EQT to achieve and surpass expectations.
By improving operations and reducing costs, the Company is delivering
substantial and sustainable free cash flow growth. EQT has
delivered more than
$300 millionin free cash flow over the past two quarters. The Company is also on track to generate approximately $300 to $400 millionof adjusted free cash flow in 2019 and $2.9 billionof adjusted free cash flow over the next five years, with further upside expected to come from the Company’s Target10% Initiative as we realize additional cost savings. Under the continued leadership of the Board and our new management team, which is now fully in place, we are laser-focused on optimizing lateral lengths, spacing and operating cadence, while reducing costs. And, importantly, we are committed to greater transparency and management accountability in driving these results for shareholders.
EQT’s focus is clear: the Company will continue to drive free cash flow growth and generate superior returns for shareholders, further demonstrating the successful transformation of EQT and the efficacy of its leadership and Cash Flow Plan. In light of all of this, we believe that the Company is on a strong trajectory, and it would not be in the best interests of EQT’s shareholders to replace the Board and management team again at this time.
AT A PIVOTAL MOMENT IN ITS HISTORY, EQT HAS THE
COMPOSITION TO PROVIDE EFFECTIVE OVERSIGHT
It is important to underscore that our Board and management team are not
opposed to, and indeed embrace, constructive disruption. EQT has
implemented tangible, significant and value-creating changes over the
last year designed to responsibly – but meaningfully – disrupt the
status quo at EQT. In
The Board has now nominated three outstanding, new independent director candidates for election at the 2019 Annual Meeting with extensive upstream, operating and executive experience. Our new director nominees were chosen after an extensive search that was tailored to address the specific needs of the Company, the skill set of our incumbent directors and the desire for continued performance improvement. Our new director nominees bring valuable perspectives and highly relevant experience. Very importantly, all of EQT’s incumbent directors and nominees are committed to independence and the hallmarks of good governance.
We have serious reservations regarding your Nominees, however. Because
Moreover, in addition to your Nominees not being sufficiently independent, we do not believe that the skill set of your Nominees is comparable to the depth, breadth and experience of the director candidates nominated by EQT. The Board believes that Danny brings relevant experience with regard to Rice Energy’s legacy assets as well as a former public company CEO’s perspective to the EQT boardroom. However, we fail to see why the Company needs two brothers with similar backgrounds and experience when we could benefit, by contrast, from directors with a variety of direct, large-company experience, as offered by the EQT nominees.
In short, we believe that the skill set, experience and independence of the EQT nominees make them better suited to continue to implement EQT’s turnaround while avoiding the conflicts of friends-and-family relationships.
EQT HAS THE RIGHT LEADERSHIP TEAM TO EXECUTE THE NEW PLAN
Over the last six months, the Company has successfully implemented a profound strategic shift; EQT is now focused on development optimization and efficiencies. Today, the Company is led by a strong and energized management team, including a new Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, General Counsel and Head of Investor Relations.
In the first quarter of 2019, EQT announced the appointment of
With a reconstituted and actively engaged Board and management team, the Company is confident that it has the right team in place and is on the best path to continue to deliver on its ambitious and realistic plan.
EQT WOULD NOT BENEFIT FROM THE WHOLESALE
REPLACEMENT OF ITS
LEADERSHIP TEAM – THE COMPANY’S REFRESHED BOARD, LEADERSHIP AND
EMPLOYEE BASE ARE ALREADY EXECUTING A SUCCESSFUL TURNAROUND
You told us that you would expect your nominees to appoint you as the CEO and then terminate approximately 15 of the Company’s department heads to replace them with people who had similar jobs at Rice Energy. You have told us that you don’t know who all of EQT’s department heads are or exactly whom you would replace, but you said you would want to change potentially all of them.
As reflected in the actions taken over the last year, we embrace disruption when we believe changes will yield improved results without introducing material risk to ongoing operations. In contrast, and following the Company’s significant refreshment of its team and strategy, we believe your plan would be incredibly counterproductive and destabilizing, especially amid a successful turnaround. The fact that you want to look to the former department heads of Rice Energy – a group that includes your spouse and your college baseball coach – to replace up to 15 of the Company’s current department heads emphatically underscores that your suggestions are inadvisable. We believe your plans are simply irresponsible and would undercut our successful efforts to drive cash flow growth and create shareholder value. Most troubling, plans like these provide evidence of your intent to put the interests of the Rice family and your family’s friends over the interests of all other EQT shareholders if you succeed in your effort to gain control of EQT.
We also have serious concerns, based on a review of what others have
said about your time at Rice Energy, about your professionalism and
experience. We note that, prior to the initial public offering of Rice
Energy, you were removed as CEO. Instead, your brother,
After a careful review of the Rice Group’s demands, our Board has determined that your campaign is primarily intended to promote the interests of the Rice family, not EQT. Your ideas, proposals and Nominees, therefore, are not in the best interests of all of the other shareholders of the Company.
As has been communicated here and previously, the Company has implemented profound, transformative and strategically disruptive changes, both within the Company itself and at the Board level, all of which have already set the Company on a strong trajectory. We would ask you, as a shareholder, to join us in looking to the future and supporting the turnaround.
The Independent Members of the Board of Directors of
Additional details regarding EQT’s director candidates and related
matters can be found in the Company’s Notice of Annual Meeting,
definitive proxy statement and other materials, including a GOLD
universal proxy card, which will be filed with the
Ms. Carrig served as the Senior Vice President, General Counsel and
Corporate Secretary of
Ms. Carrig brings extensive legal and corporate governance experience to
EQT, having served as general counsel to Fortune 100 and Fortune 300
companies for over 20 years. Ms. Carrig also brings extensive executive
leadership experience, substantial legal, regulatory and governance
expertise and a strong E&P industry background, having served for over a
decade as general counsel of
Mr. McManus served as Chairman, Chief Executive Officer and President of
Mr. McManus’ long career in the industry and experience leading a publicly traded E&P company, including through a successful merger, equips him with substantial executive leadership, operations and M&A experience. Mr. McManus also possesses public company board experience and strong financial and accounting experience. Mr. McManus’ strong industry, leadership and operations experience will enable him to provide valuable insights to the Board.
Ms. Mitchell is a founding member of Corterra Energy (“Corterra”) and
has served as its Chief Executive Officer since 2016. Prior to Corterra,
Ms. Mitchell served in several leadership positions at
Ms. Mitchell has a robust background in E&P, having spent the bulk of
her career in the U.S. Mid-Continent, and has over 15 years of
operational leadership experience. Ms. Mitchell’s experience running the
Mid-Continent region at Newfield, with over
EQT Management speaks to investors from time to time and the analyst presentation for these discussions, which is updated periodically, is available via the Company’s investor relationship website at ir.eqt.com.
This news release contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended.
Statements that do not relate strictly to historical or current facts
are forward-looking. Without limiting the generality of the foregoing,
forward-looking statements contained in this news release specifically
include the expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of the Company and its
subsidiaries, including guidance regarding projected adjusted free cash
flow. These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from projected
results. Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. The
Company has based these forward-looking statements on current
expectations and assumptions about future events, taking into account
all information currently available to the Company. While the Company
considers these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory and other risks and uncertainties, many of which are
difficult to predict and beyond the Company’s control. The risks and
uncertainties that may affect the operations, performance and results of
the Company’s business and forward-looking statements include, but are
not limited to, those set forth under Item 1A, “Risk Factors,” of the
Company’s Form 10-K for the year ended
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Adjusted Free Cash Flow
Adjusted free cash flow is defined as the Company’s net cash provided by operating activities less changes in other assets and liabilities, less accrual-based capital expenditures attributable to continuing operations. Adjusted free cash flow is a non-GAAP supplemental financial measure that the Company's management and external users of its consolidated financial statements, such as industry analysts, lenders and ratings agencies use to assess the Company’s liquidity. The Company believes that adjusted free cash flow provides useful information to management and investors in assessing the impact of the Company’s ability to generate cash flow in excess of capital requirements and return cash to shareholders. Adjusted free cash flow should not be considered as an alternative to net cash provided by operating activities or any other measure of liquidity presented in accordance with GAAP.
The Company has not provided projected net cash provided by operating activities or a reconciliation of projected adjusted free cash flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts such as predicting the timing of its and customers’ payments, with accuracy to a specific day, months in advance. Furthermore, the Company does not provide guidance with respect to its average realized price, among other items, that impact reconciling items between net cash provided by operating activities and adjusted free cash flow. Natural gas prices are volatile and out of the Company’s control, and the timing of transactions and the income tax effects of future transactions and other items are difficult to accurately predict. Therefore, the Company is unable to provide projected net cash provided by operating activities, or the related reconciliation of projected adjusted free cash flow to projected net cash provided by operating activities, without unreasonable effort.
Participants in the Solicitation
The Company, its directors and certain of its executive officers will be
deemed participants in the solicitation of proxies from shareholders in
respect of the 2019 Annual Meeting. Information regarding the names of
the Company’s directors and executive officers and their respective
interests in the Company by security holdings or otherwise is set forth
in the Company’s preliminary proxy statement for the 2019 Annual
Meeting, filed with the
Blake McLean – Senior Vice President, Investor Relations and Strategy
Linda Robertson – Media Relations and Brand Manager