ESG REPORTOur Governance Structure
Our Board of Directors (Board) is the highest governance body at EQT and oversees the management of our business with a focus on policy and strategic direction. We have only one class of voting stock and all directors on our Board are elected annually, reinforcing our Board’s accountability to our shareholders. Additionally, our Board has adopted comprehensive Corporate Governance Guidelines, which require that a majority of our directors be independent and that an independent director be annually appointed to serve as Board Chair. Our Board leadership philosophy, including the responsibilities of our independent Board Chair, are outlined in paragraph 5(g) of our Corporate Governance Guidelines.
As of December 31, 2022, our Board had four standing committees:
- Audit
- Corporate Governance
- Management Development and Compensation (Compensation Committee)
- Public Policy and Corporate Responsibility (PPCR Committee)
The duties of each standing Board Committee are set forth in a written charter, a copy of which is available on our Governance Documents page.
Consistent with our core values, our Board values diversity and believes it contributes to a variety of viewpoints that improve the quality of dialogue and effectiveness of the Board’s decision-making process. Details regarding certain diversity characteristics of our Board are included in the chart below. Women comprise over half of our Board as of December 31, 2022. Additionally, female directors serve in key leadership roles, including serving as chair of our Board and all four of our standing Board Committees. Our Board also recognizes the importance of racial and ethnic diversity and is committed to improving such diversity on our Board. As of December 31, 2022, 64% of our directors were racially, ethnically, or gender diverse. As our Board evolves, racial and ethnic diversity will continue to be a crucial factor in assessing the Board’s overall mix of skills, experience, background, and characteristics.
EQT Board of Directors Composition and Diversity[1]
[1] Minority population includes American Indian/Alaska Native, Asian, Black/African American, Hispanic, or Latino or any employee disclosing two or more races.
ESG Oversight
Two Board-level Committees — the Corporate Governance Committee and the Public Policy and Corporate Responsibility Committee (PPCR Committee) — are responsible for evaluating and providing oversight, guidance, and perspective with respect to our environmental, social, and governance (ESG) strategy. Each of these Committees meets no less than five times each year and has explicit ESG oversight responsibilities embedded within their formal committee charters.
Our management-level ESG Committee supports the Corporate Governance and PPCR Committees and helps guide the execution of our ESG strategy. The ESG Committee is comprised of our Chief Executive Officer, General Counsel, Chief Financial Officer, and other senior leaders, and meets every other week. The ESG Committee reports and makes recommendations regularly to both the Corporate Governance and PPCR Committees on emerging ESG matters. Our full Board also discusses critical ESG topics such as safety, sustainability, climate change, and other environmental matters during the five regular Board meetings each year.
Compensation
Executives and other employees are invited to participate in our Short-Term Incentive Plan (STIP), our annual cash incentive compensation program. Executives also participate in our Incentive Performance Share Unit Program (IPSUP), our long-term equity incentive compensation program. The incentive compensation opportunities available under the STIP are based on our successful achievement of specific financial, operational, and environmental, health, and safety (EHS) performance. The incentive compensation opportunities available under the IPSUP are generally dependent on total shareholder return performance on a relative and absolute basis. The Management Development and Compensation Committee (Compensation Committee) of our Board establishes the compensation performance metrics annually and reviews our performance against these metrics before certifying payout of compensation under the applicable year’s STIP and IPSUP.
Since 2021, the Compensation Committee has included a targeted year-over-year reduction of greenhouse gas (GHG) emissions intensity as a performance metric in our STIP. Reduction of GHG emissions intensity is an important component of our ESG strategy, and the Compensation Committee believes this environmental performance measure is a meaningful way to link annual incentive compensation opportunity with achievement of our GHG intensity reduction goals. For 2023, 25% of our STIP funding continues to be linked to ESG-focused measures — specifically, GHG emissions intensity reduction and safety intensity.
The Compensation Committee prioritizes environmentally responsible operations and carbon offset generation in achieving our net-zero goal by attributing a portion of our executive and senior management compensation opportunity to our environmental performance — maintaining accountability for achieving our emissions targets. In 2022, we continued to drive progress on our goal of achieving net-zero GHG emissions from our existing Production segment operations on a Scope 1 and Scope 2 basis by or before 2025. The Compensation Committee incorporated achieving our net-zero goal into the 2022 IPSUP[1] by including a performance payout modifier that links a meaningful portion of participant payout opportunity to both (i) achieving our goal of becoming net-zero by or before 2025 and (ii) how net-zero is achieved. This payout modifier will result in reduced incentive compensation opportunities if our net-zero goal is either not achieved or if it is achieved through the purchase of carbon credits in excess of the benchmark threshold established by the Compensation Committee. For more information on the STIP and IPSUP, and the related performance metrics, see our 2023 Proxy Statement.
ESG Strategy Development and Implementation
As we aim for our ESG strategy to be fully informed by best practices, our ESG Committee leverages external research and benchmarking, evaluates ESG data trends, and engages stakeholders to identify the issues most pertinent to us and to our stakeholders and to identify potential opportunities for improvement. Examples of our stakeholder engagement include external outreach to investors, credit providers, landowners, environmental certification organizations, nongovernmental organizations, and other groups to better understand how we can address key ESG issues. Every two to three years, we also conduct a robust strategic materiality assessment to confirm that our ESG disclosures, initiatives and strategy are aligned with our internal and external stakeholders’ expectations for us as a company. We most recently conducted a refreshed strategic materiality assessment in 2022. For more information regarding our strategic materiality assessment and our overall stakeholder engagement strategy, see Stakeholder Engagement and Materiality.
Our ESG Committee also assists our executive team and senior management in developing, implementing, and monitoring initiatives, processes, policies, and disclosures in accordance with our ESG strategy. In combination with our Board and Committee oversight, the ESG Committee provides input to the Board on strategic direction and works with senior management and specific business departments to coordinate company-wide implementation and execution of our ESG strategy.
ESG Reporting
Our ESG Committee oversees our ESG reporting process, including coordination with internal subject matter experts as needed. In addition, our Board and Chief Executive Officer have an opportunity to review and provide feedback regarding our annual ESG Report.
[1] Our IPSUP compensation plans are based on a three-year performance period and potential payouts under each IPSUP are assessed at the end of the applicable performance period. For example, the 2022 IPSUP performance period extends from 2022 through 2024. Because our net-zero goal was established as a milestone to be achieved by 2025, meaning that performance against this objective will be measured as of year-end 2024, the Compensation Committee determined that it would not be appropriate to include a payout modifier for achievement of our net-zero goal beyond the 2022 IPSUP.
