Document/ExhibitDescriptionPagesSize 1: 11-K Annual Report by an Employee Stock Purchase, HTML 199K Savings or Similar Plan
2: EX-23 Consent of Expert or Counsel HTML 6K
‘11-K’ — Annual Report by an Employee Stock Purchase, Savings or Similar Plan
Report
of Independent Registered Public Accounting Firm
To the Plan Participants and the Plan Administrator of Equitrans Midstream Corporation Employee Savings Plan
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of Equitrans Midstream Corporation Employee Savings Plan (the Plan) as of December 31, 2022 and 2021, and the related statement of changes in net assets available for benefits for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net
assets available for benefits of the Plan at December 31, 2022 and 2021, and the changes in its net assets available for benefits for the year ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Schedule Required by ERISA
The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2022 (referred to as the “supplemental schedule”), has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying
accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
Additions to (Deductions from) Net Assets Attributed to:
Investment income (loss):
Dividend
income
$
3,167,009
Interest income
45,349
Net depreciation in fair value of assets
(45,349,088)
Total investment loss
(42,136,730)
Contributions:
Employer
10,184,461
Participant
9,205,146
Rollovers
364,821
Total
contributions
19,754,428
Other income
32,666
Interest on notes receivable from participants
62,922
Benefits paid to participants
(8,891,983)
Administrative expenses
(62,676)
Net
decrease in net assets available for benefits
(31,241,373)
Net assets available for benefits:
At beginning of period
228,636,341
At end of period
$
197,394,968
See
accompanying notes to financial statements.
3
EQUITRANS MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
1. Description of Plan
The following description of the Equitrans Midstream Corporation Employee Savings Plan, effective November 13, 2018 (as amended, the Plan), provides only general information. Participants should refer to the Plan document and the summary plan description for a complete description of
the Plan’s provisions. If any statement in this description is inconsistent with the terms of the Plan document, the Plan document will control.
General
The Plan is a defined contribution profit sharing and savings plan with 401(k) salary reduction features and previously provided for the investment in qualifying employer securities. Effective as of the market close on May 31, 2022, the Employer Stock Fund (defined below) is no longer available for contributions under the Plan. Participants who failed to reallocate new contributions that were allocated to the Employer Stock Fund by such deadline had such contributions allocated to the age-based Fidelity Freedom Blend Commingled Pool Fund Class Q. However, dividends, if applicable, continue to be reinvested
in the Employer Stock Fund after the May 31, 2022 freeze date. The Employer Stock Fund will be eventually removed from the Plan following a prudent process. The removal is expected to be completed during the second or third quarter of 2024. The Plan was originally adopted on November 13, 2018, by Equitrans Midstream Corporation (the Company) and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
The Plan is administered by the Benefits Administration Committee (BAC), a named fiduciary of the Plan responsible for matters other than those that are investment related. The BAC has discretionary power and authority to construe, interpret and administer
the Plan, and may adopt rules and regulations for administering the Plan. The Benefits Investment Committee (BIC) is the named fiduciary responsible for carrying out the investment-related provisions of the Plan.
All full-time and certain part-time employees of the Company are eligible to participate in the Plan on their first day of employment. Temporary employees, interns, co-op students or leased employees are not eligible to participate in the Plan.
Contributions
All participants may elect to contribute through payroll deductions to the Plan on a pre-tax basis up to 50% of eligible compensation, limited to $20,500 in 2022. These contributions
are referred to as contract contributions. Participants who are 50 years of age or older during the plan year are permitted to contribute additional pre-tax catch-up contributions, up to $6,500 annually in 2022. Participants’ total annual contributions (both individual contributions and Company contributions) may not exceed the contribution limits under Section 415(c) of the Internal Revenue Code (IRC).
Each pay period, participants are eligible to receive a Company matching contribution equal to $0.50 per every $1.00 of contract contributions, subject to a maximum Company matching contribution of the lesser of the amount permitted by the IRC and 3% of eligible compensation. For the year ended December 31,
2022, the aggregate amount of the matching contribution, including the true-up contribution described below, was $3,203,948.
The Plan includes a true-up feature for all contributing participants that ensures each participant receives the full Company matching contribution the participant is entitled to for the Plan year, regardless of the timing of the contract contributions. As a result, if the participant makes contract contributions that qualify for matching contributions that are not received on a per-pay period basis, the Company makes an additional matching contribution. For the year ended December 31,
2022, the aggregate amount of the true-up contribution was $429,955.
Participants may also receive a retirement contribution, which is determined on an annual basis at the discretion of the Company. During 2022, the amount of the retirement contribution was 6% of eligible compensation, subject to limitations imposed by the IRC. For the year ended December 31, 2022, the aggregate amount of the retirement contribution was $6,980,513.
Each participant directs the investment of contract and catch-up contributions (together, elective contributions) under Plan
provisions intended to comply with ERISA Section 404(c). Each participant directs their elective contributions into various investment options offered by the Plan and may change their investment options on a daily basis. If a participant refuses or fails to make an investment election, their elective contributions are invested in a qualified default investment alternative designated by the BIC under the Plan until the participant makes their investment election. This investment is
4
EQUITRANS MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements (continued)
made into the
age-based Fidelity Freedom Blend Target Date Commingled Pool Fund Class Q (FID Funds), a diversified portfolio based on the participant’s date of birth. The Company’s retirement and matching contributions are allocated among investment options in the same manner as the participant’s elective contributions as described above and are completed under Plan provisions intended to comply with ERISA Section 404(c).
A participant is entitled to exercise voting rights attributable to the shares invested in the Equitrans Midstream Corporation Common Stock Fund (Employer Stock Fund) allocated to their account. The trustee votes any shares for which the trustee does not receive instructions in the same proportion as those
shares for which it has received instructions.
Rollover Contributions
Participants are permitted to make rollover contributions (contributions transferred to the Plan from other qualified retirement plans), subject to certain requirements.
Participant Accounts
Each participant’s account is credited with the participant’s elective and rollover contributions, the Company’s matching, retirement and true-up contributions
and Plan earnings, based on investment selection, and charged with an allocation of administrative expenses not paid by the Company. Investment-related administrative expenses are allocated to participant accounts based on investment selections and account balances. Other administrative expenses not paid by the Company are allocated to participants on a per capita or per transaction basis. Each participant is entitled to the benefit provided from the participant’s vested account.
Vesting
Participants
are 100% vested in the value of elective contributions and rollover contributions made to the Plan. If employment of a participant is terminated from the Company for any reason other than involuntary termination without cause, retirement on or after age 65, death or total and permanent disability, the participant is entitled to receive the vested value of any Company contributions (matching, retirement and true-up).
Matching, retirement and true-up contributions vest in accordance with the following schedule:
Years
of Continuous Service Completed
Vested Interest
Less than one year
0%
One year but less than two years
33%
Two years but less than three years
67%
Three years or more
100%
Years
of continuous service completed are determined by the Plan and include employment by the Company’s former parent company and, as applicable, entities that the Company acquired. Forfeitures of the non-vested portion of participant accounts are used to reduce future Company contributions (matching, retirement and true-up). Certain forfeitures may be restored if the participant is reemployed before accruing five consecutive break-in-service years, as defined in the Plan. For the year ended December 31, 2022, aggregate forfeited non-vested accounts reduced Company contributions by $109,003. At December 31, 2022, the forfeiture credit balance was nominal.
Upon
involuntary termination without cause, retirement on or after age 65, death or total and permanent disability of the participant or termination of the Plan, a participant is entitled to receive the full value of any Company contributions (matching, retirement and true-up), regardless of years of continuous service completed.
Payments of Benefits to Participants
Upon separation from service with the Company due to death, disability, retirement or termination of employment, a participant whose vested account balance exceeds $1,000 may elect to receive a lump-sum distribution, a direct rollover or installment payments. Installment payments can be based on a fixed dollar amount for each installment payment. In
5
EQUITRANS
MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements (continued)
addition, a participant may elect an installment payment based on a fixed period. Under the fixed period calculation option, the account balance will be depleted over the fixed number of years specified, not to exceed 20 years. As soon as administratively possible after a distribution event, a participant whose vested account balance is $1,000 or less will automatically receive a lump-sum distribution equal to their vested account balance.
In-service withdrawals are available in certain limited circumstances, as set forth in the Plan. Hardship withdrawals are allowed for participants incurring an immediate and heavy financial need, as set forth
in the Plan. Hardship withdrawals are strictly regulated by the Internal Revenue Service (IRS), and a participant must exhaust all available distributions.
Notes Receivable from Participants
A participant may borrow from their account up to a maximum amount equal to the lesser of $50,000 or 50% of the participant’s vested eligible account balance. Loan terms may not exceed five years or, for the purchase of a primary residence, 30 years. The $50,000
limit, when applied, is reduced by the participant’s highest outstanding loan balance during the preceding twelve-month period. A participant may not apply for a second loan if a loan is outstanding. The loans bear interest equal to 1% above the “prime rate” (as posted to the “Federal Reserve Website” on the last business day of the prior month) at the time the loan is approved. This rate remains the same for the entire period of the loan. Principal and interest
are paid ratably through payroll deductions. Upon termination of employment, if the loan is not repaid in full as of the last business day of the calendar quarter following the calendar quarter in which the loan is initially considered past due, the unpaid loan balance will automatically be treated as a distribution to the participant.
Administrative Expenses and Other Income
Administrative expenses associated with the Plan may be paid out of Plan assets or by the Company. Investment management fees are paid by Plan participants based on participation in the various funds. In 2022, the funds’ operating expense ratios ranged from 0.02% to 0.79% based on the funds’ prospectuses, with an assumed/actual
recordkeeping offset of 0.00% to 0.10%. Fund operating expenses are deducted from fund investment returns.
In 2022, fees for recordkeeping services and other general administration activities related to operating the Plan (Plan Administration Fees) were charged at a fixed amount of $65 per participant. In addition, a separate annual fee of 0.05% was assessed and paid by Plan participants with a balance in the Employer Stock Fund on the last business day of each quarter. Negotiated fee offsets (revenue sharing arrangements) between the Plan’s recordkeeper and certain professionally managed funds offered by the Plan are applied to and reduce the Plan Administration Fees. If the fee offsets for a quarter exceed the Plan Administration Fees for the quarter, a credit is applied, which may be allocated to participant accounts at the election of the plan administrator. For the year ended December 31,
2022, the Plan received $30,850 in revenue credits, which have been recorded in the other income line item in the accompanying Statement of Changes in Net Assets Available for Benefits.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual basis of accounting, except for as otherwise noted below.
Investments
The Plan’s investments are reported at fair value in the Statements of Net Assets Available for Benefits. See Note 3 for additional information regarding the fair value of the Plan’s
investments.
The Employer Stock Fund consists of Equitrans Midstream Corporation common stock (Company common stock). The Plan held 318,829 and 305,970 shares of Company common stock as of December 31, 2022 and 2021, respectively. Purchases and sales of securities are recorded on a trade-date basis. Dividend income is recorded on the dividend payment date. Net appreciation (depreciation) in fair value of investments includes the Plan’s gains and losses on investments bought and sold as well as held during the Plan year.
6
EQUITRANS
MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements (continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Payment of Benefits
Benefits are recorded when paid.
Notes
Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. No allowance for credit losses has been recorded as of December 31, 2022 or 2021. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution pursuant to the terms of the Plan and applicable tax law, the notes receivable balance is reduced, and a benefit payment is recorded.
3. Fair Value Measurement
The Plan has an established process for determining fair value for its financial instruments,
which consist of mutual funds, Company common stock and common/collective trusts. The Plan has categorized its financial instruments into a three-level fair value hierarchy, based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
Level 2 - Inputs to the valuation methodology include:
•quoted
prices for similar assets or liabilities in active markets;
•quoted prices for identical or similar assets or liabilities in inactive markets;
•inputs other than quoted prices that are observable for the asset or liability; and
•inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input used is observable for substantially the full term of the asset or liability.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
fair value measurement level of assets and liabilities within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Plan uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
Below is a description of the valuation techniques and inputs used for assets measured at fair value.
Mutual funds: Valued at quoted market prices in an exchange and on an active market that represents the net asset value (NAV) of shares held by the Plan at year-end.
7
EQUITRANS
MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements (continued)
Employer Stock Fund: Valued at the closing price on the last trading date of the Plan year, reported on the active market on which the individual securities are traded.
Common/collective trusts: This category consists of the Fidelity Managed Income Portfolio II Fund and FID Funds. Common/collective trusts are valued at fair value as determined by the issuer, based on current fair values of the underlying assets of the fund. Since the net asset value of these common/collective trusts are determined and published and can be traded daily by participants, the Plan determined that these funds have a readily determinable fair value and are disclosed
as Level 2 investments in the fair value hierarchy table below.
The preceding methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the plan administrator believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The Plan’s investments measured at fair value were as follows:
Total
Fair
Value at
December 31,
Assets
2022
Level 1
Level 2
Mutual
funds
$
80,779,157
$
80,779,157
$
—
Employer stock fund
2,136,720
2,136,720
—
Common/collective trusts
113,079,262
—
113,079,262
Total
investments, at fair value
$
195,995,139
$
82,915,877
$
113,079,262
Total Fair
Value
at
December 31,
Assets
2021
Level 1
Level 2
Mutual funds
$
95,527,900
$
95,527,900
$
—
Employer
stock fund
3,164,338
3,164,338
—
Common/collective trusts
128,589,782
—
128,589,782
Total investments, at fair value
$
227,282,020
$
98,692,238
$
128,589,782
4.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to amend the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and the IRC. In the event of termination of the Plan, the interests of all affected participants will become fully vested.
5. Risks and Uncertainties
The Plan invests in various investment securities, including shares of Company common stock, that are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the values of participants’ account balances under the Plan and the amounts reported in the Statements of Net Assets Available for Benefits.
8
EQUITRANS MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements (continued)
6. Related-Party and Party-in-Interest Transactions
Certain
Plan investments include shares of mutual funds and common/collective trusts managed by Fidelity Management Trust Company or an affiliate thereof (Fidelity). Fidelity is the trustee and recordkeeper of the Plan and, therefore, these transactions may qualify as party-in-interest transactions under ERISA. Transactions with respect to notes receivable from participants and the Employer Stock Fund also qualify as related-party and party-in-interest transactions due to the relationships between the participants, on the one hand, and the Company and the Plan, on the other hand.
7. Income Tax Status
The underlying volume submitter plan received an advisory letter from the IRS dated June
30, 2020, stating that the form of the plan is qualified under Section 401 of the IRC and, therefore, the related trust is tax-exempt. The plan administrator has determined that it is eligible to, and has chosen to, rely on the current IRS volume submitter advisory letter. As a qualified plan, the Plan is required to operate in conformity with the IRC to maintain its qualified status. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes the Plan is qualified and the related trust is tax-exempt.
U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The plan administrator has determined that, as of December 31,
2022 and 2021, no uncertain tax positions existed or were expected to be taken that would require recognition of a tax liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
8. Subsequent Events
Effective January 1, 2023, participants may elect to contribute to the Plan through a Roth 401(k) contribution option in addition to the pre-tax contribution. With the Roth 401(k) feature, participant contributions are made on an after-tax basis and growth in the Roth 401(k) portion of the account will be tax-free if certain holding periods applicable to Roth contributions
are satisfied, as described below. The combined Roth 401(k) contributions and pre-tax contributions are subject to the same employee deferral dollar limits ($22,500 for 2023) and qualify for Company matching contributions, subject to the Company’s current match limit (50% of the first 6% of a participant’s eligible pay that is contributed to the Plan). Eligible participants may also elect to make catch-up contributions as Roth 401(k) contributions. In order for the Roth 401(k) investment earnings to be withdrawn tax-free, the distribution must be made at least five years after the first Roth 401(k) contribution and after the participant turns 59½, dies or becomes disabled.
9
SUPPLEMENTARY
FINANCIAL INFORMATION
10
EQUITRANS MIDSTREAM CORPORATION
EMPLOYEE SAVINGS PLAN
EIN: 83-0516635
Plan No.: 201
Schedule H, Line 4i, Schedule of Assets (Held at End of Year)
Fidelity Freedom Blend 2050 Commingled Pool Class Q
Common/collective trust
$
20,882,511
*
Fidelity Freedom Blend 2045 Commingled
Pool Class Q
Common/collective trust
18,033,855
*
Fidelity Freedom Blend 2040 Commingled Pool Class Q
Common/collective trust
17,549,649
*
Fidelity Freedom Blend 2035 Commingled Pool Class Q
Common/collective
trust
15,365,166
*
Fidelity 500 Index Fund
Mutual fund
12,645,813
*
Fidelity Freedom Blend 2025 Commingled Pool Class Q
Common/collective trust
11,076,956
*
Fidelity
Freedom Blend 2030 Commingled Pool Class Q
Common/collective trust
10,447,851
MFS Massachusetts Investors Growth Stock R6 Fund
Mutual fund
9,576,349
*
Fidelity Freedom Blend 2055 Commingled Pool Class Q
Common/collective
trust
8,946,342
*
Fidelity Contrafund Class K6
Mutual fund
8,130,007
AF Washington Mutual Investors Fund R6
Mutual fund
7,741,016
*
Fidelity
Balanced Fund Class K
Mutual fund
6,152,618
*
Fidelity Managed Income Portfolio - Class 1
Common/collective trust
5,303,929
*
Fidelity Total Market Index Fund
Mutual
fund
5,293,448
*
Fidelity Diversified International Fund Class K6
Mutual fund
5,101,371
T. Rowe Price Diversified Mid Cap Growth Fund
Mutual fund
4,837,710
Dodge
& Cox Income Fund Class X
Mutual fund
3,183,090
*
Fidelity Freedom Blend 2020 Commingled Pool Class Q
Common/collective trust
3,089,312
*
Fidelity Treasury Only Money Market Fund
Mutual
fund
2,924,629
T. Rowe Price QM US Small Cap Growth Equity Fund
Mutual fund
2,917,184
DFA Emerging Markets
Mutual fund
2,882,486
American
Beacon Small-Cap Value Fund R6
Mutual fund
2,771,610
Nuance Mid-Cap Value Fund Z Class
Mutual fund
2,502,256
*
Employer stock fund
Equitrans Midstream
securities - common stock
2,136,720
PGIM High Yield Fund Class R6
Mutual fund
1,940,797
*
Fidelity Freedom Blend 2060 Commingled Pool Class Q
Common/collective trust
1,833,923
*
Fidelity
US Bond Index Fund
Mutual fund
1,105,474
*
Fidelity Global ex US Index Fund
Mutual fund
1,073,299
*
Fidelity Freedom Blend Income Commingled Pool Class Q
Common/collective
trust
189,566
*
Fidelity Freedom Blend 2065 Commingled Pool Class Q
Common/collective trust
162,049
*
Fidelity Freedom Blend 2015 Commingled Pool Class Q
Common/collective trust
154,758
*
Fidelity
Freedom Blend 2010 Commingled Pool Class Q
Common/collective trust
43,395
*
Notes receivable from participants
Participant loans – 4.25% to 8.00% **
-
1,399,829
$
197,394,968
*
Party-in-interest
to the Plan.
**
Maturities extend through year 2049.
***
Cost information is not applicable for participant-directed investments.
11
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the members of the Benefits Administration Committee of the Plan have duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.
