DEF 14A: Kinetik Holdings Inc. Announces Annual Meeting of Stockholders and Proxy Statement

Kinetik Holdings Inc. has released its proxy statement for the 2024 annual meeting of stockholders, detailing proposals for director elections, executive compensation, and auditor ratification.

Summary

• Kinetik Holdings Inc. will hold its 2024 annual meeting of stockholders on May 20, 2024, in a virtual-only format.
• Stockholders will vote on the election of eleven directors, a non-binding resolution on executive compensation, approval of the Amended and Restated Kinetik Holdings Inc. 2019 Omnibus Compensation Plan, and ratification of KPMG LLP as the independent auditor for fiscal year 2024.
• The Board recommends voting FOR all director nominees, FOR the advisory vote on executive compensation, FOR the approval of the amended compensation plan, and FOR the ratification of KPMG as the independent auditor.
• The proxy statement includes information on director nominees, executive compensation, corporate governance, and related party transactions.
• Blackstone and I Squared Capital are entitled to designate directors based on their ownership of the Company's common stock.
• The Stockholders Agreement terminated with respect to Apache following an underwritten secondary offering of shares by Apache Midstream in December 2023.
• The Board has determined that D. Mark Leland, Kevin S. McCarthy, Laura A. Sugg, Deborah L. Byers, David I. Foley, JP Munfa, William Ordemann, Elizabeth P. Cordia, Michael Kumar and Jesse Krynak are independent under the Company's Corporate Governance Guidelines and the applicable NYSE listing standards and SEC rules.
• The Compensation Committee approved an annual incentive payout to each NEO equal to 117% of their respective 2023 target annual incentive.
• Each of our NEOs elected to receive their 2023 annual incentive awards in fully vested shares of Class A Common Stock.

Sentiment

Score: 7

Explanation: The document is factual and informative, presenting a balanced view of the company's governance and compensation practices. The sentiment is neutral to positive, reflecting a well-managed company with a commitment to sustainability and good governance.

Positives

• The Board is actively engaged in risk oversight, with committees assigned specific areas of responsibility.
• The company is committed to sustainability, with initiatives to reduce emissions and promote safety.
• The company has strong corporate governance practices, including annual director elections and independent board committees.
• The company has adopted insider trading, anti-hedging, and anti-pledging policies and has implemented significant stock ownership guidelines for its directors and executive officers.
• The company has a clawback policy in place to recover incentive compensation in the event of financial restatements.
• The company has a stock ownership policy for executive officers to align their interests with those of stockholders.
• The company received 99.8% stockholder support for its executive compensation program at the 2023 annual meeting of stockholders.

Negatives

• Kinetik is currently considered to be a controlled company within the meaning of the NYSE corporate governance rules, as more than 50% of the Company’s voting power is held by an individual, group, or another company.
• The Reinvestment Agreement terminated automatically on March 8, 2024.

Risks

• The company's status as a controlled company could make its common stock less attractive to some investors or otherwise harm its stock price.
• The company is subject to risks related to related-party transactions, particularly with Blackstone and I Squared.
• The company is subject to risks related to cybersecurity, which are overseen by the Audit Committee.
• The company is subject to risks related to sustainability, which are overseen by the Governance Committee.

Future Outlook

The proposed increase in the number of shares authorized for issuance under the Amended 2019 Plan is expected to provide flexibility to enable the continued use of the Amended 2019 Plan for equity-based grants and awards consistent with the objectives of our compensation program for five years or more while attempting to minimize dilution to our stockholders.

Industry Context

The document provides insights into the governance and compensation practices of a midstream energy company, Kinetik Holdings Inc., and its relationships with major stakeholders like Blackstone and I Squared Capital. It reflects industry trends in executive compensation, sustainability, and corporate governance.

Comparison to Industry Standards

• The peer group for executive compensation includes Western Midstream Partners, LP, DCP Midstream, LP, Antero Midstream Corporation, Magellan Midstream Partners, L.P., EnLink Midstream, LLC, NuStar Energy L.P., Equitrans Midstream Corporation, DT Midstream, Inc., and Crestwood Equity Partners LP.
• The compensation program is designed to align with industry best practices and maintain competitiveness in attracting and retaining executive talent.
• The company's sustainability reporting aligns with the Global Reporting Initiative (GRI) Standards, the Sustainability Accounting Standards Board (SASB) and the Energy Infrastructure Council (EIC) / GPA Midstream Association reporting template.

Corporate Governance

Related Party Transactions

• The Company is contracted to provide gas gathering, compression, processing, treating, transmission, and natural gas liquids transmission services pursuant to acreage dedications provided by Apache, receiving $100.0 million in 2023.
• Kinetik incurred total expenses of $0.8 million for the year ended December 31, 2023 related to lease agreements with Apache.
• Kinetik recorded income related to these agreements of $4.0 million for the year ended December 31, 2023.

Stakeholder Impact

• The proposals outlined in the proxy statement will impact shareholders through potential changes in director composition, executive compensation, and corporate governance.
• Employees may be affected by changes to the compensation plan and potential for equity-based incentives.
• The company's sustainability initiatives and ethical conduct impact the communities in which it operates.
• The company's financial performance and risk management affect lenders and creditors.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its annual meeting on May 20, 2024.
• The Compensation Committee will consider the outcome of the advisory vote on executive compensation when making future decisions.

Key Dates

Keywords

proxy statement, annual meeting, directors, executive compensation, KPMG, stockholders, governance, sustainability, Blackstone, I Squared, Kinetik Holdings