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 (Amendment No.    )
Filed by the Registrant   ☒
Filed by a Party other than the Registrant   ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
PLAINS GP HOLDINGS, L.P.
(Name of Registrant as Specified In Its Charter)
   
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0 -11.

 
[MISSING IMAGE: lg_plainsgphold-pn.jpg]
April 14, 2022
Dear Fellow Plains Investors,
We are grateful for your investment in Plains, and are pleased to invite you to join us for our May 25, 2022 annual meeting.
2021 was a year of solid execution for Plains that included significant free cash flow generation and debt reduction, disciplined capital investment and cost control, and the completion of a number of strategic initiatives that improve the positioning of the company for the future. Our teams rallied through demand fluctuations and a changing COVID-19 landscape to exceed our financial plan and substantially achieve our goals throughout the year. Key 2021 achievements include:

Generated $2.2 billion in Adjusted EBITDA attributable to Plains and ~$1.65 billion in Free Cash Flow after Distributions, which exceeded our goals for the year.

Reduced debt by ~$1 billion and ended the year with ~$3.0 billion of committed liquidity.

Returned ~$695 million to common equity holders via distributions and unit repurchases.

Completed asset sales of $875 million.

Achieved a targeted credit rating upgrade from Moody’s to investment grade and received affirmations of investment grade ratings from S&P and Fitch.

Meaningfully expanded our Permian operational and commercial footprint via the cashless, debt-free Plains Oryx Permian Basin Joint Venture.

Placed both our Wink-to-Webster and Capline reversal projects into partial service and reduced capital expenditures by ~$230 million relative to our initial 2021 plan.

Advanced our investor and external stakeholder initiatives by progressing sustainability efforts to lower emissions, publishing a fulsome sustainability report (including disclosure of Scope 1 and Scope 2 emissions) and creating our Emerging Energy team.

Amended our governing agreements to eliminate all director designation rights, requiring that all Directors be subject to public election.

Formed a Health, Safety, Environmental and Sustainability Board Committee to provide enhanced oversight of our health, safety, environmental and sustainability activities and reporting.
We are optimistic about the future of our business as energy demand continues to return to pre-pandemic levels and it becomes increasingly apparent that there will be a critical need for all forms of energy in order to satisfy growing global demand. Underlying supply and demand fundamentals, together with realistic assumptions regarding the growth of various sources of energy, support our belief that hydrocarbons will remain an essential part of the world economy for decades to come. Energy from hydrocarbons will play a key role in supporting a growing global population, reducing poverty, extending longevity and improving overall quality of life.
With our network of strategically positioned North American midstream assets and our focus on the long term positioning and optimization of our business (including through the pursuit of emerging energy opportunities), we are very well positioned to play a critical role in the delivery of energy across North America and globally. As we do so, we will remain focused on generating meaningful multi-year free cash flow and maintaining a balanced approach to capital allocation that includes near-term debt reduction and increasing returns to equity holders through both distribution increases and equity buybacks. We believe we are on the right track and that execution of our plan will deliver strong performance and enhanced value for our investors over the long term.
We appreciate your continued investment and support and we look forward to your participation in our 2022 annual meeting in May.
Sincerely,
[MISSING IMAGE: sg_williechiang-bw.jpg]
Willie Chiang
Chairman of the Board & CEO
 

 
[MISSING IMAGE: lg_plainsgphold-pn.jpg]
Plains GP Holdings, L.P.
333 Clay Street, Suite 1600
Houston, Texas 77002
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 25, 2022
To the holders of Class A, Class B and Class C shares of Plains GP Holdings, L.P.:
The 2022 Annual Meeting (the “PAGP Annual Meeting”) of the Class A, Class B and Class C shareholders (collectively, our “Shareholders”) of Plains GP Holdings, L.P. will be held on May 25, 2022, at 10:30 a.m. Central Time, in the Texas Room located on the 19th Floor of Three Allen Center, 333 Clay Street, Houston, Texas 77002. At the PAGP Annual Meeting, our Shareholders will consider and vote on the following matters:
1.
The election of four Class II directors to serve on the board of directors (the “Board”) of PAA GP Holdings LLC until the 2025 annual meeting;
2.
The ratification of the appointment of PricewaterhouseCoopers LLP as our and Plains All American Pipeline, L.P.’s (“PAA”) independent registered public accounting firm for the fiscal year ending December 31, 2022;
3.
The approval, on a non-binding advisory basis, of our 2021 named executive officer compensation; and
4.
Any proposal to transact such other business as may properly come before the PAGP Annual Meeting and any adjournment or postponement thereof.
The Board unanimously recommends that our Shareholders vote “FOR” proposals 1, 2 and 3. Additional information regarding these proposals is included in the attached proxy statement. See “Information About the PAA and PAGP Annual Meetings” below for more information.
We have set the close of business on March 28, 2022 as the record date for determining which of our Shareholders are entitled to receive notice of and to vote at the PAGP Annual Meeting and any postponements or adjournments thereof. A list of Shareholders entitled to vote is on file at our principal offices, 333 Clay Street, Suite 1600, Houston, Texas 77002.
Your vote is very important. Whether or not you plan to attend the PAGP Annual Meeting, please cast your vote by following the Internet or telephone voting instructions on the proxy card. You may also vote by completing, signing and dating the accompanying proxy card and returning it promptly in the postage-prepaid envelope provided. See “Questions and Answers About the PAGP Annual Meeting — How do I vote?” in the attached proxy statement for more details. Returning the proxy card or voting on the Internet or by telephone does not deprive you of your right to attend the PAGP Annual Meeting and to vote your shares for the matters to be acted upon at the PAGP Annual Meeting.
 

 
By Order of the Board of Directors of
PAA GP Holdings LLC, general partner of
Plains GP Holdings, L.P.
[MISSING IMAGE: sg_richardmcgee-bw.jpg]
Richard McGee
Executive Vice President, General Counsel and Secretary
Houston, Texas
April 14, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 2022
The Notice of Annual Meeting, the proxy statement for the Annual Meeting and our 2021 Annual
Report are available at http://www.astproxyportal.com/ast/21140/.
 

 
TABLE OF CONTENTS
1
1
1
7
18
22
24
58
61
62
66
67
68
69
70
70
70
 
i

 
PLAINS GP HOLDINGS, L.P.
PROXY STATEMENT
For
2022 Annual Meeting of Shareholders To Be Held On May 25, 2022
GENERAL INFORMATION ABOUT THE PLAINS GP HOLDINGS, L.P.
ANNUAL MEETING
The board of directors (the “Board”) of PAA GP Holdings LLC (“PAGP GP” or our “general partner”), is soliciting proxies to be voted on behalf of our Class A, Class B and Class C shareholders (collectively, our “Shareholders”) at the 2022 annual meeting of Shareholders (the “PAGP Annual Meeting”). This proxy statement is being furnished to you in connection with the solicitation of proxies by and on behalf of the Board for use at the PAGP Annual Meeting and includes information about the matters to be voted upon at the PAGP Annual Meeting. The PAGP Annual Meeting will be held on May 25, 2022, at 10:30 a.m. Central Time, in the Texas Room located on the 19th Floor of Three Allen Center, 333 Clay Street, Houston, Texas 77002.References to “PAGP,” “we,” “us,” “our,” “ours” and similar terms refer to Plains GP Holdings, L.P.
Proxy materials, including the Notice of Annual Meeting, this proxy statement, proxy card and our Annual Report on Form 10-K for the year ended December 31, 2021 (our “2021 Annual Report”), are being mailed to Shareholders beginning on or about April 14, 2022.
We will furnish additional copies of our 2021 Annual Report without charge upon the written request of any record or beneficial owner of our Class A, Class B or Class C shares whose proxy we are soliciting in connection with the PAGP Annual Meeting. Please address requests for additional copies of the 2021 Annual Report to the Investor Relations Department, Plains All American, 333 Clay Street, Suite 1600, Houston, Texas 77002, or email your request to plainsIR@paalp.com.
INFORMATION ABOUT THE PAA AND PAGP ANNUAL MEETINGS
Plains All American Pipeline, L.P. (“PAA”) will hold an annual meeting of its unitholders (the “PAA Annual Meeting”) immediately prior to the PAGP Annual Meeting. At the PAA Annual Meeting, PAA unitholders (excluding Plains AAP, L.P. (“AAP”)) will vote on a pass-through basis on proposals 1, 2 and 3 described below by instructing PAA how to vote the PAGP Class C shares that it owns on such proposals at the PAGP Annual Meeting.
At the PAGP Annual Meeting, our Class A, Class B and Class C shareholders will be asked to approve proposals 1, 2 and 3 described below. Each Shareholder of record will be entitled to one vote for each Class A, Class B and Class C share owned for proposals 1, 2 and 3. PAA owns all of the issued and outstanding Class C shares and will vote (or refrain from voting) such shares on a pass-through basis on behalf of and according to the direction of PAA’s unitholders (excluding AAP) with respect to proposals 1, 2 and 3.
QUESTIONS AND ANSWERS ABOUT THE PAGP ANNUAL MEETING
The following questions and answers are intended to address briefly some commonly asked questions regarding the PAGP Annual Meeting. These questions and answers may not address all questions that may be important to you as a Shareholder. Please refer to the additional information contained elsewhere in this proxy statement and the documents referred to in this proxy statement.
Q:
What is the purpose of these proxy materials?
A:
The Board is soliciting your proxy to vote at the PAGP Annual Meeting because you were a Shareholder at the close of business on March 28, 2022, the record date for the PAGP Annual Meeting (the “Record Date”), and are therefore entitled to receive notice regarding the PAGP Annual Meeting, and to attend and vote at the PAGP Annual Meeting. This proxy statement summarizes
 
1

 
the information that you need to know in order to cast your vote at the PAGP Annual Meeting. As a Shareholder, your vote is very important and the Board strongly encourages you to exercise your right to vote. You do not need to attend the PAGP Annual Meeting to vote your shares, and we encourage you to vote even if you are unable to attend the PAGP Annual Meeting in person. If you are unable to attend the PAGP Annual Meeting, you may vote by Internet, by telephone or by signing and returning the attached proxy card in the envelope provided. See “How do I vote?” below.
Q:
What is the recommendation of the Board?
A:
The Board unanimously recommends that you vote in the following manner:

FOR the election of each of Victor Burk, Kevin S. McCarthy, Harry N. Pefanis and Gary R. Petersen as a Class II director of the Board to serve until the 2025 annual meeting;

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our and Plains All American Pipeline, L.P.’s independent registered public accounting firm for the fiscal year ending December 31, 2022; and

FOR the approval, on a non-binding advisory basis, of our 2021 named executive officer compensation.
Q:
When and where is the PAGP Annual Meeting?
A:
The PAGP Annual Meeting will be held on May 25, 2022, at 10:30 a.m. Central Time, in the Texas Room located on the 19th Floor of Three Allen Center, 333 Clay Street, Houston, Texas 77002. Only Shareholders of record as of March 28, 2022 are entitled to vote and ask questions at the PAGP Annual Meeting. If you are not a Shareholder of record but hold shares in “street name” through a brokerage firm, bank, dealer or other similar organization, trustee, or nominee (generally referred to in this proxy statement as a “broker”), you may attend the PAGP Annual Meeting as a guest. Please note that if you hold shares in “street name” through a broker and desire to vote your shares or ask questions during the PAGP Annual Meeting, you must request and obtain a valid “legal proxy” from your broker and register to attend the PAGP Annual Meeting as a Shareholder with American Stock Transfer & Trust Company, LLC (“AST”).
Information on who can vote and ask questions during the PAGP Annual Meeting is discussed immediately below.
Q:
Who can vote and ask questions at the PAGP Annual Meeting?
A:
You are entitled to vote and ask questions at the PAGP Annual Meeting if you were a Shareholder of record as the close of business on March 28, 2022, the record date for the PAGP Annual Meeting.
Shareholder of Record: Shares Registered in Your Name.   You are a Shareholder of record if your shares were registered directly in your name with our transfer agent, AST, at the close of business on March 28, 2022. As a Shareholder of record, you may vote and ask questions during the PAGP Annual Meeting. Whether or not you plan to attend the PAGP Annual Meeting, we urge you to submit a proxy to ensure your vote is counted. See page 3 for detailed instructions on how to vote your shares.
Beneficial Owner: Shares Registered in the Name of Broker.   If your shares were held in an account at a broker at the close of business on March 28, 2022, then you are the beneficial owner of shares held in “street name” and the broker holding your account is considered to be the Shareholder of record for purposes of voting at the PAGP Annual Meeting. As a beneficial owner, you have the right to direct your broker regarding how to vote the shares in your account. You are also invited to attend the PAGP Annual Meeting as a guest. Because you are not the Shareholder of record, you may not vote your shares or ask questions at the PAGP Annual Meeting unless you request and obtain a valid legal proxy from the organization that holds your shares giving you the right to vote the shares at the PAGP Annual Meeting. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a legal proxy form.
 
2

 
After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the PAGP Annual Meeting as a Shareholder, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to AST. Requests for registration should be directed to proxy@astfinancial.com or to facsimile number 718-765-8730. Written requests can be mailed to:
American Stock Transfer & Trust Company, LLC
Attn: Proxy Tabulation Department
6201 15th Avenue | Brooklyn, NY 11219
Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 18, 2022.
You will receive a confirmation of your registration by email after we receive your registration materials. Once registered, you may attend the PAGP Annual Meeting, submit questions and vote your shares during the meeting.
Q:
Who is soliciting my proxy?
A:
The Board is sending or otherwise providing you access to this proxy statement in connection with its solicitation of proxies for use at the PAGP Annual Meeting.
Q:
Who is entitled to vote at the PAGP Annual Meeting?
A:
All holders of our Class A, Class B and Class C shares at the close of business on the Record Date are entitled to receive notice of the PAGP Annual Meeting and to vote the Class A, Class B and Class C shares that they held on the Record Date at the PAGP Annual Meeting.
Each Shareholder is entitled to one vote for each Class A, Class B and Class C share owned for proposals 1, 2 and 3. On March 28, 2022, 194,192,777 Class A shares, 46,850,538 Class B shares and 532,273,469 Class C shares were issued and outstanding and entitled to vote. PAA owns all of the issued and outstanding Class C shares and will vote such shares on a “pass-through” basis on proposals 1, 2 and 3 at the PAGP Annual Meeting on behalf of and according to the direction of its eligible unitholders as determined at the PAA Annual Meeting.
Q:
How do I vote?
A:
If you are a Shareholder of record at the close of business on the Record Date, you may vote your shares by any of the following methods:

Voting online before the meeting.   You may vote online by visiting the Internet address listed on your proxy card. Internet voting procedures have been established to verify your identity and to confirm your voting instructions. Please have your proxy card available when you visit the Internet address.

Voting by telephone before the meeting.   You may vote by telephone by calling the toll-free number listed on your proxy card. Telephone voting procedures have been established to verify your identity, to allow you to provide proxy voting instructions and to confirm that your instructions were accurately recorded. Please have your proxy card available when you call.

Voting by mail before the meeting.   You may vote by mail by returning your completed, signed and dated proxy card in the enclosed postage-paid return envelope. However, in order to ensure that your vote is received in a timely manner, we recommend that you vote online or by telephone as described above.

Voting during the meeting.   If you are a Shareholder of record, you may attend the PAGP Annual Meeting, ask questions and vote during the meeting. If you are a beneficial owner of shares held in street name, you must be registered to attend the PAGP Annual Meeting as a Shareholder and must have a valid legal proxy in order to vote during the meeting. Please read the “Beneficial Owner: Shares Registered in the Name of Broker” answer under the question “Who
 
3

 
can vote and ask questions at the PAGP Annual Meeting?” above for instructions on how to register to attend the PAGP Annual Meeting and obtain a legal proxy.
Internet and telephone voting will be available to Shareholders of record 24 hours a day until 11:59 p.m. Eastern Time on May 24, 2022, the night before the PAGP Annual Meeting. If you use the Internet or the toll-free telephone number to provide your proxy voting instructions, you do not need to mail in your proxy card. If you mail in your proxy card, it must be received by PAGP before the voting polls close at the PAGP Annual Meeting.
Even if you plan to attend the PAGP Annual Meeting, please vote your shares by proxy in advance of the PAGP Annual Meeting (either online, by telephone or by mail as described above) as soon as possible so that your shares will be represented at the PAGP Annual Meeting if for any reason you are unable to attend.
Q:
What do I do if I want to change my vote after I have already voted by proxy?
A:
If you are a Shareholder of record at the close of business on the Record Date, you may change your vote at any time before the voting polls close at the PAGP Annual Meeting by:

submitting a proxy with new voting instructions using the Internet or telephone voting system (please note that the deadline for voting online or by telephone is 11:59 p.m. Eastern Time on May 24, 2022);

delivering a later-dated, executed proxy card to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219;

delivering a written notice of revocation of your proxy to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219; or

attending the PAGP Annual Meeting and voting during the PAGP Annual Meeting pursuant to the instructions above. Please note that attendance at the PAGP Annual Meeting will not by itself (i.e., without also voting) revoke a previously granted proxy.
If you are a beneficial owner of shares held in street name and you have instructed your broker or other nominee to vote your shares, you must follow the procedure your broker or other nominee provides to change those instructions. You may also vote during the PAGP Annual Meeting if you obtain a legal proxy from your broker or other nominee and register to attend the PAGP Annual Meeting pursuant to the instructions above.
Q:
What is a broker non-vote?
A:
A broker non-vote occurs when shares held by a broker, bank or other nominee on behalf of a beneficial owner are not voted with respect to a particular matter because the broker lacks discretionary authority to vote the shares and has not received voting instructions from the beneficial owner. Brokers, banks and other nominees only have discretionary authority to vote on routine proposals; they are prohibited from voting on non-routine proposals without instructions from the beneficial owner. The ratification of the independent auditor (Proposal 2) is the only routine matter on which brokers, banks and other nominees may vote in their discretion on behalf of beneficial owners who have not provided voting instructions. The election of directors (Proposal 1) and the advisory vote to approve our 2021 named executive officer compensation (Proposal 3) are non-routine matters. If a broker returns a proxy with a voting choice selected for a routine proposal but with no voting choice selected for a non-routine proposal, the result is a broker non-vote. Broker non-votes are counted as present and entitled to vote for purposes of determining a quorum at the meeting, but are not considered votes cast and will have no impact on non-routine matters. Accordingly, we do not expect there to be any broker non-votes for Proposal 2 and broker non-votes will not be counted as votes either “FOR” or “AGAINST” Proposals 1 and 3.
Q:
What constitutes a quorum?
A:
The holders of a majority of the outstanding Class A, Class B and Class C shares entitled to vote and represented in person or by proxy shall constitute a quorum at the PAGP Annual Meeting.
 
4

 
Your shares will be counted as present at the PAGP Annual Meeting if:

you are present and vote at the meeting; or

you, or your broker if you are a beneficial owner of shares held in street name, have submitted a properly executed proxy.
Executed proxies received but marked as abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum.
Q:
What vote is required to approve the proposals discussed in this proxy statement?
A:
The following table sets forth certain information with respect to the proposals to be voted upon by the Class A, Class B and Class C shareholders at the PAGP Annual Meeting:
Proposal
Voting Options
Vote Required for Approval of
Proposal at the PAGP Annual Meeting
1.    The election of four Class II directors to serve on the Board until the 2025 annual meeting. You may vote “FOR”, or you may “WITHHOLD” authority to vote for, all, some or none of the nominees for director. Directors will be elected by a plurality of the votes cast, in person or by proxy, by the holders of our Class A, Class B and Class C shares present and entitled to vote, voting as a single class. Broker non-votes are not considered votes cast and will have no effect on the election of directors.
2.    The ratification of the appointment of
PricewaterhouseCoopers LLP as PAGP’s and PAA’s independent registered public accounting firm for the fiscal year ending December 31, 2022.
You may vote “FOR” or “AGAINST” the proposal, or you may “ABSTAIN” from voting. This proposal must receive a majority of the votes cast, in person or by proxy, by the holders of our Class A, Class B and Class C shares present and entitled to vote, voting as a single class. Abstentions will be counted as votes present and entitled to vote and will have the same effect as votes “AGAINST” this proposal. We do not expect there to be any broker non-votes for this proposal.
3.    The approval, on a non-binding advisory basis, of our 2021 named executive officer compensation. You may vote “FOR” or
“AGAINST” the proposal, or you may “ABSTAIN” from voting.
This proposal must receive a majority of the votes cast, in person or by proxy, by the holders of our Class A, Class B and Class C shares present and entitled to vote, voting as a single class. Abstentions will be counted as votes present and entitled to vote and will have the same effect as votes “AGAINST” this proposal. Broker non-votes are not considered votes cast and will have no effect on the outcome of this proposal.
 
5

 
Q:
Who covers the expense of the proxy solicitation?
A:
The expense of preparing, printing and mailing this proxy statement and the proxies solicited hereby will be borne by us. In addition to the use of the mail, proxies may be solicited by PAGP GP’s directors and officers, as well as by employees of Plains All American GP LLC (“GP LLC”), without additional remuneration, by mail, phone, fax or in person. We will also request brokerage firms, banks, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of our shares as of the Record Date and will provide reimbursement for the cost of forwarding the proxy materials in accordance with customary practice. Your cooperation in promptly voting your shares electronically, via the Internet or by telephone, or by signing and returning the enclosed proxy card will help to avoid additional expenses. We have hired Georgeson LLC to solicit proxies for a fee of $10,000 plus reasonable expenses for additional services.
Q:
What if I do not mark a voting choice for some of the matters listed on my proxy card?
A:
If you return a signed proxy card without indicating your voting choice, your shares will be voted in accordance with the Board’s recommendation for each proposal with respect to which a voting choice is not indicated.
Q:
Who will tabulate and certify the vote?
A:
AST will tabulate and certify the vote, and a representative of AST will act as the independent inspector of elections for the PAGP Annual Meeting.
 
6

 
PROPOSAL 1 — ELECTION OF CLASS II DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF VICTOR BURK, KEVIN S. MCCARTHY, HARRY N. PEFANIS AND
GARY R. PETERSEN TO SERVE AS A CLASS II DIRECTOR ON OUR GENERAL PARTNER’S
BOARD OF DIRECTORS UNTIL THE 2025 ANNUAL MEETING.
Board and Governance Structure
Summary of Recent Changes.    Investors have voiced a preference for certain governance practices, and over the course of the last several years, our board and governance structure has evolved and changed in ways that we believe are meaningfully beneficial to investors. Highlights of some of the key changes are as follows:
2016

Replaced our dual board structure for PAA and PAGP with a unified governance structure that resulted in the Board being solely responsible for the governance of PAA, AAP and PAGP;

Amended our governing documents to enfranchise all shareholders of PAGP and all public common unitholders and Series A preferred unitholders of PAA by providing for shareholder elections of directors commencing in 2018 (on a staggered three year rolling basis);
2017

Added Asian American director to the Board (subsequently became Chairman of the Board in January 2020);
2018

Held first annual meeting for the election of directors;

Added new independent female director to the Board;
2019

Amended our governing documents to require that a majority of our Board satisfy applicable stock exchange independence requirements, despite the fact that as a limited partnership we are exempt from such requirements (eight out of 11 (73%) of our current Board members have been assessed by the Board and determined to be independent);

Amended our governing documents to create a strong lead independent director role in connection with the retirement of our former Chairman and the re-combination of the roles of Chairman and CEO;

With the assistance of our governance committee, initiated a comprehensive board assessment, refreshment and succession planning process that includes a periodic skills and needs assessment, the development and maintenance of a formal board succession plan and annual director performance evaluations;
2020

Added new independent director to the Board;

Appointed independent chairman to compensation committee;

Adopted Equity Ownership Guidelines and Clawback Policy;
2021

Established a new committee, the Health, Safety, Environmental and Sustainability (“HSES”) Committee, to assist the Board in its oversight of various HSES matters and facilitate the efforts of management to further strengthen our focus on sustainability and ESG matters;

Mandated that the members of all Board committees be independent;
 
7

 

Amended our governing documents to increase the number of directors subject to public election by adding the three directors who are current or former members of management; and

Amended our governing documents to eliminate the lone remaining legacy director designation right, resulting in all Board members being subject to public election, and all non-management directors serving on the same basis in terms of rights, duties and obligations of directors.
General Overview and Board Makeup.   Our Board has responsibility for managing the business and affairs of PAGP, PAA and AAP. The Board currently has 11 members, including the CEO, who currently serves as Chairman of the Board. As contemplated by our governing documents, because the roles of CEO and Chairman of the Board are held by the same person, the Board has designated one of our independent directors (Bobby Shackouls) to serve as Lead Director. Our governing documents also require that at least a majority of directors must meet the independence requirements of the national securities exchange on which the securities of PAA and PAGP are listed (currently Nasdaq).
The Board is divided into three staggered classes such that the terms for the directors within each class expire on a rotating three-year basis, as set forth below. The Board (excluding directors whose terms are expiring) and, subject to certain ownership and notice requirements, shareholders have the right to nominate individuals to stand for election at an annual meeting. Individuals elected at an annual meeting will serve for a term of three years, subject to a director’s earlier resignation, death or removal. If an individual is elected to the Board to fill a vacancy, that director will have the same remaining term as his or her predecessor. All directors standing for election at the 2022 annual meeting were nominated by the Board (excluding the vote of the directors whose terms are expiring); no nominations were received from eligible shareholders.
Independent
Audit
Committee
Compensation
Committee
Governance
Committee
HSES
Committee
Chairman
of the
Board
Lead
Director
Class I Directors
(Term expires 2023)
Willie Chiang, Chairman of the Board and CEO
[MISSING IMAGE: tm212451d1-icon_boxbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitediabw.jpg]
Alexandra D. Pruner
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
Lawrence M. Ziemba
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
[MISSING IMAGE: tm212451d1-icon_blackstarbw.jpg]
Class II Directors
(Term expires 2022)
Victor Burk*
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_blackstarbw.jpg]
Kevin S. McCarthy*
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
Harry N. Pefanis, President*
[MISSING IMAGE: tm212451d1-icon_boxbw.jpg]
Gary R. Petersen*
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
Class III Directors
(Term expires 2024)
Greg L. Armstrong, Senior Advisor to the CEO (former Chairman of the Board and CEO)
[MISSING IMAGE: tm212451d1-icon_boxbw.jpg]
John T. Raymond
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_blackstarbw.jpg]
Bobby S. Shackouls
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_blackstarbw.jpg]
[MISSING IMAGE: tm212451d1-icon_blackdiabw.jpg]
Christopher M. Temple
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
 
8

 
*
Nominated by the Board for re-election at the 2022 PAGP Annual Meeting.
[MISSING IMAGE: tm223468d1-icon_boxtickbw.jpg]
Determined by the Board to be independent under applicable Nasdaq and SEC rules.
[MISSING IMAGE: tm212451d1-icon_boxbw.jpg]
Company Employee — independence has not been assessed by the Board.
[MISSING IMAGE: tm212451d1-icon_whitestarbw.jpg]
Committee Member
[MISSING IMAGE: tm212451d1-icon_blackstarbw.jpg]
Committee Chairman
[MISSING IMAGE: tm212451d1-icon_whitediabw.jpg]
Chairman of the Board
[MISSING IMAGE: tm212451d1-icon_blackdiabw.jpg]
Lead Director
As described in the summary above, since 2016, the Board has taken numerous meaningful steps to provide PAGP shareholders and PAA unitholders the right to vote for members of the Board. At a special meeting of PAGP shareholders called by the Board and held in November 2016 in connection with our simplification transaction (the “Simplification Transaction”), our shareholders overwhelmingly approved the following changes to our governing documents, among others:

the implementation of a unified governance structure for PAA and PAGP that resulted in the Board being solely responsible for the governance of PAGP, AAP and PAA; and

the division of the Board into three classes and the commencement of shareholder elections of directors by class starting in 2018, with the participation and enfranchisement of all shareholders of PAGP and all public common unitholders and Series A preferred unitholders of PAA.
These features distinguish PAGP and PAA from many of their midstream master limited partnership peers. Together with the alignment of interests among investors that was created through the elimination of PAA’s incentive distribution rights in connection with the Simplification Transaction, the Board has put in place an overall governance structure that vastly improves the governance rights of our investors and which we believe is regarded by many as a structure that, together with other factors, produces a degree of alignment with our investors that places us at the top of our master limited partnership peers for the midstream sector regarding governance structure and voting rights. The Board believes that the continued implementation of the modified governance structure as approved by PAGP’s shareholders, together with the governance enhancements made in recent years, is consistent with the will and expectations of investors in PAA and PAGP.
Director and Nominee Experience and Qualifications
With respect to any director nominations made by the Board in connection with annual director elections or in the event of a vacancy on the Board, in each case to the extent requested by the Chairman of the Board, the governance committee assists in identifying and screening potential candidates. The governance committee makes its recommendations based on an assessment of the skills, experience and characteristics of the candidate in the context of the needs of the Board. It is the policy and practice of the governance committee and the Board to consider diversity (including diversity of gender, race and ethnicity) in connection with the process of identifying and assessing potential Board candidates.
During 2019, with the assistance of the governance committee, the Board initiated a board assessment, refreshment and succession planning process. This process includes (i) the periodic assessment of the skills, background and experience of our directors, which is used to identify potential enhancement areas relative to the ideal mix of skills, background and experience for our board, (ii) the development and maintenance of a board succession plan that identifies near and longer-term actions and includes succession plans for each board committee, and (iii) the annual evaluation by each director of the performance of every other director in a variety of categories that directly impact overall board performance and effectiveness. Board succession planning efforts and director evaluations are updated on a regular basis. The governance committee also oversees the Board’s annual self-assessment process as well as the process by which the Board assesses the effectiveness of its various committees.
In evaluating director nominees and in reviewing the qualifications and experience of the directors continuing in office, the governance committee and Board consider a variety of factors, including independence, financial literacy, personal and professional accomplishments, diversity and experience
 
9

 
in light of the needs of the company. For incumbent directors, factors also include past performance on the Board. The Board has determined that it is beneficial to have individuals on the Board with the following skills, experiences, and characteristics (See the Director Skills Matrix below for an overview of the skills, experiences and characteristics of our current Board members):

Public Company Experience (Officer/Director)

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/Government Relations

Operations/Engineering/Construction

Industry Experience (Upstream/Midstream/Downstream)

Private Equity

Diversity (Gender/Race/Ethnicity)

International

Cybersecurity/IT
Director Skills Matrix
Armstrong
Burk
Chiang
McCarthy
Pefanis
Petersen
Pruner
Raymond
Shackouls
Temple
Ziemba
Public Company Experience
Finance/Accounting
Business Development/ Strategy/Commercial
Legal/Governance/Government Relations
Operations/Engineering/ Construction
Industry Experience
Private Equity
Diversity
International
Cybersecurity/IT
Board Diversity Matrix
The following information is provided pursuant to Nasdaq Listing Rule 5605(f) and 5606:
Board Diversity Matrix (As of March 28, 2022)
Total Number of Directors
11
Female Male Non-Binary
Did Not Disclose
Part I: Gender Identity
Directors
1
10
Part II: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
1
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
1
9
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
 
10

 
Class II Directors Standing for Election at the 2022 Annual Meeting
The Board has nominated Messrs. Burk, McCarthy, Pefanis and Petersen, current Class II directors, for election at the 2022 annual meeting. Each nominee has consented to serve if elected and, if elected, will serve until the 2025 annual meeting, subject to their earlier resignation, death or removal. If any of the nominees becomes unavailable to serve as a director prior to the 2022 annual meeting, the Board may designate a substitute nominee, or the Board may decide to reduce the size of the Board. In the case of a substitute nominee, the persons named as proxies will vote for the substitute nominee designated by the Board.
VICTOR BURK
Independent
PAGP/PAA Director
since 2010
Committees:
Audit (chair)
Victor Burk, age 72, has served as a director of PAGP GP since January 2014. He has been a Managing Director for Alvarez and Marsal, a privately owned professional services firm, since April 2009. From 2005 to 2009, Mr. Burk was the global energy practice leader for Spencer Stuart, a privately owned executive recruiting firm. Prior to joining Spencer Stuart, Mr. Burk served as managing partner of Deloitte & Touche’s global oil and natural gas group from 2002 to 2005. He began his professional career in 1972 with Arthur Andersen and served as managing partner of Arthur Andersen’s global oil and natural gas group from 1989 until 2002. Mr. Burk served on the board of directors and audit committee of EV Energy Partners, L.P. from September 2006 until June 2018. Mr. Burk served as a director and as chairman of the audit committee of PNGS GP LLC, the general partner of PAA Natural Gas Storage, L.P., from April 2010 through December 2013. Mr. Burk also serves as a board member of the Sam Houston Area Council of the Boy Scouts of America. He received a BBA in Accounting from Stephen F. Austin State University, graduating with highest honors. The Board has determined that Mr. Burk is “independent” under applicable Nasdaq and SEC rules and qualifies as an “Audit Committee Financial Expert.” We believe that Mr. Burk’s background, spanning over 30 years of extensive public accounting and consulting experience in the energy industry, coupled with his demonstrated leadership abilities, bring valuable experience and insight to the Board.
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Industry Experience

International
KEVIN S. MCCARTHY
Independent
PAGP/PAA Director
since 2020
Committees:
None
Kevin S. McCarthy, age 62, has served as a director of PAGP GP since October 2020. He currently serves as Vice Chairman at Kayne Anderson, where he co-founded the firm’s energy infrastructure securities activities, and served as CEO and Chairman of the Board of Directors for Kayne Anderson’s closed-end funds from 2004 through July 2019. Prior to joining Kayne Anderson in 2004, Mr. McCarthy was global head of energy investment banking at UBS Securities LLC and held similar positions at PaineWebber Incorporated and Dean Witter Reynolds. Mr. McCarthy serves as a director of Kinetik Holdings Inc. (formerly Altus Midstream Company) and Whiting Petroleum Corporation, and previously served as a director of Range Resources Corporation, ONEOK, Inc., Emerge Energy Services LP and K-Sea Transportation Partners L.P. He also sits on the board of directors of the Gladney Fund. Mr. McCarthy earned a BA in economics and geology from Amherst College and an
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Industry Experience

Private Equity
 
11

 
MBA in Finance from the Wharton School at the University of Pennsylvania. The Board has determined that Mr. McCarthy is “independent” under applicable Nasdaq and SEC rules. Mr. McCarthy’s extensive investment management background and involvement in the energy sector, along with the breadth and depth of his market and industry knowledge, brings substantial experience, insight and skill to the Board.
HARRY N. PEFANIS
Not Independent
PAGP/PAA Director
since 2017
President
Harry N. Pefanis, age 64, has served as a director of PAGP GP since February 2017 and as President of PAGP GP and GP LLC since March 2021. He previously served as President and Chief Commercial Officer of PAGP GP and GP LLC from January 2018 until March 2021. He served as President and Chief Operating Officer of GP LLC from PAA’s formation in 1998 through December 2017, and as President and Chief Operating Officer of PAGP GP from July 2013 through December 2017. He was also a director of PAA’s former general partner. In addition, he was Executive Vice President — Midstream of Plains Resources from May 1998 to May 2001. He previously served Plains Resources as: Senior Vice President from February 1996 until May 1998; Vice President — Products Marketing from 1988 to February 1996; Manager of Products Marketing from 1987 to 1988; and Special Assistant for Corporate Planning from 1983 to 1987. Mr. Pefanis was also President of several former midstream subsidiaries of Plains Resources prior to PAA’s formation. Mr. Pefanis served as a director of Oasis Midstream Partners, L.P. from July 2018 until February 2022. He is also a director of the Memorial Hermann Foundation. Mr. Pefanis’s involvement with PAA since its formation and his considerable operational, commercial, accounting and financial experience brings important and valuable skills to the Board.
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Operations/Engineering/ Construction

Industry Experience

International
GARY R. PETERSEN
Independent
PAGP/PAA Director
since 2001
Committees:
Compensation
Governance
Gary R. Petersen, age 75, has served as a director of PAGP GP since November 2016. He served as a director of PAA’s general partner from June 2001 until November 2016. Mr. Petersen is a Managing Partner of EnCap Investments L.P., an investment management firm which he co-founded in 1988. He also served as a director of EV Energy Partners, L.P. from September 2006 until June 2018. He had previously served as Senior Vice President and Manager of the Corporate Finance Division of the Energy Banking Group for RepublicBank Corporation. Prior to his position at RepublicBank, he was Executive Vice President and a member of the Board of Directors of Nicklos Oil & Gas Company from 1979 to 1984. He served from 1970 to 1971 in the U.S. Army as a First Lieutenant in the Finance Corps and as an Army Officer in the Army Security Agency. He is a member of the Independent Petroleum Association of America, the Houston Producers Forum and the Petroleum Club of Houston. Mr. Petersen is a director of the Memorial Hermann Health System and the
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Industry Experience

Private Equity

International
 
12

 
Houston Museum of Natural Science. He also sits on the board of trustees of The Council on Recovery. Mr. Petersen holds BBA and MBA degrees in finance from Texas Tech University. The Board has determined that Mr. Petersen is “independent” under applicable Nasdaq and SEC rules. Mr. Petersen has been involved in the energy sector for a period of more than 35 years, garnering extensive knowledge of the energy sectors’ various cycles, as well as the current market and industry knowledge that comes with management of approximately $18 billion of energy-related investments. In tandem with the leadership qualities evidenced by his executive background, we believe that Mr. Petersen brings numerous valuable attributes to the Board.
Other Directors (Not Standing for Election at the 2022 Annual Meeting)
Class I Directors (terms expire in 2023):
WILLIE CHIANG
Not Independent
PAGP/PAA Director
since 2017
Chairman and CEO
Willie Chiang, age 61, has served as a director of PAGP GP since February 2017, as Chief Executive Officer of PAGP GP and GP LLC since October 2018 and as Chairman of the Board since January 2020. He served as Executive Vice President and Chief Operating Officer of PAGP GP and GP LLC from January 2018 until October 2018. He also served as Executive Vice President and Chief Operating Officer (U.S.) of PAGP GP and GP LLC from August 2015 through December 2017. Prior to joining Plains, Mr. Chiang served as Executive Vice President — Operations for Occidental Petroleum Corporation from 2012 until 2015. From 1996 until 2012, he served in various positions at ConocoPhillips, including most recently as Senior Vice President — Refining, Marketing, Transportation and Commercial. He serves on the board of the Society for the Performing Arts and as chair of the finance committee and as incoming chair for the United Way of Greater Houston. He received a BS in Mechanical Engineering from South Dakota School of Mines and Technology and completed the Advanced Management Program at the University of Pennsylvania. Mr. Chiang’s role as CEO and his broad experience in the energy industry, together with his leadership capabilities and strategic focus, make him highly qualified to serve on the Board.
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Operations/Engineering/ Construction

Industry Experience

Diversity

International
ALEXANDRA D. PRUNER
Independent
PAGP/PAA Director
since 2018
Committees:
Audit
Governance
Alexandra D. Pruner, age 60, has served as a director of PAGP GP since December 2018. Ms. Pruner has served as a Senior Advisor of Perella Weinberg Partners (“PWP”), a global independent advisory firm providing strategic and financial advice and asset-management services, and its energy division, Tudor, Pickering, Holt & Co., since December 2018. She previously served as Partner and Chief Financial Officer of PWP from December 2016 through November 2018. She served as CFO and a member of the Management Committee at Tudor, Pickering, Holt & Co. from the firm’s founding in 2007 until its
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Industry Experience
 
13

 
combination with PWP in 2016. Ms. Pruner served as a director and member of the audit committee of Anadarko Petroleum Corporation from December 2018 until August 2019. She has also served as a director of NRG Energy, Inc. since October 2019, as chairman of the board of Malta Inc. since April 2022, and as a director of Encino Acquisition Partners, LLC since November 2019 and as chairman of the board since December 2021. She is the founder and a board member of Women’s Global Leadership Conference in Energy & Technology, is an Emeritus Director of the Amegy Bank Development Board, and is Chair of Brown University’s President’s Advisory Council on the Economics Department. She also serves on the Board of the Houston Zoo and the Texas Medical Center, among other volunteer efforts. Ms. Pruner holds a BA in Economics from Brown University. The Board has determined that Ms. Pruner is “independent” under applicable Nasdaq and SEC rules and qualifies as an “Audit Committee Financial Expert.” Ms. Pruner’s extensive experience in the energy industry from a variety of perspectives, along with her strong finance and investment banking background, make her uniquely qualified to serve on the Board.

Diversity

International

Cybersecurity/IT
LAWRENCE M. ZIEMBA
Independent
PAGP/PAA Director
since 2020
Committees:
Audit
HSES (chair)
Lawrence M. Ziemba, age 66, has served as a director of PAGP GP since January 2020. Mr. Ziemba served as Executive Vice President, Refining, and a member of the executive committee of Phillips 66 from May 2012 until his retirement in December 2017. From 2001 to May 2012, he served in various downstream positions with ConocoPhillips, including most recently as President, Global Refining, and as a member of the executive committee. He also held various positions of increasing responsibility with Tosco/Unocal from 1977 to 2001. He has held a number of industry leadership positions, including with API and AFPM. He currently serves on the board of directors of PBF Logistics GP LLC. He also serves on the board of trustees of Duchesne Academy in Houston, where he chairs the finance committee. Mr. Ziemba received a BS in mechanical engineering from the University of Illinois — Champaign and an MBA from the University of Chicago. The Board has determined that Mr. Ziemba is “independent” under applicable Nasdaq and SEC rules. We believe that his operations, technical and project management expertise, coupled with his business sense and understanding of strategic positioning in the energy space, adds a diverse operating and downstream perspective to the Board.
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Operations/Engineering/ Construction

Industry Experience

International
 
14

 
Class III Directors (terms expire in 2024):
GREG L. ARMSTRONG
Not Independent
PAGP/PAA Director
since 1998
Former Chairman
and CEO
Greg L. Armstrong, age 63, has served as a director of PAGP GP since 2013. He has also served as Senior Advisor to the CEO since January 1, 2020. Mr. Armstrong served as Chairman of the Board of PAGP GP from July 2013 through December 31, 2019 and as Chief Executive Officer of PAGP GP from July 2013 until his retirement from such position in October 2018. He also served as Chief Executive Officer of GP LLC from PAA’s formation in 1998 until his retirement from that position in October 2018. He served as a director of PAA’s general partner or former general partner from PAA’s formation until November 2016 when the Board of PAGP GP assumed responsibility for PAA in addition to PAGP and AAP. In addition, he was President, Chief Executive Officer and director of Plains Resources Inc. from 1992 to May 2001 and served in various roles of increasing responsibility from 1981 to 1992. Mr. Armstrong served as a director of the Federal Reserve Bank of Dallas from 2015 to 2021, retiring as Chair at the end of 2021. Mr. Armstrong also serves as a director of the Memorial Hermann Health System and NOV, Inc. Mr. Armstrong is also a member of the advisory board of the Maguire Energy Institute at the Cox School of Business at Southern Methodist University, a member of the adjunct faculty for the University of Oklahoma’s Executive MBA in Energy program and is a past Chairman of the National Petroleum Council. Mr. Armstrong’s experience with PAA since its formation, including as former Chairman and CEO, and his long-time involvement in the energy industry, provide the Board with invaluable insight and perspective.
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Operations/Engineering/ Construction

Industry Experience

International
JOHN T. RAYMOND
Independent
PAGP/PAA Director
since 2010
Committees:
Compensation (chair)
John T. Raymond, age 51, has served as a director of PAGP GP since October 2013. He served as a director of PAA’s general partner from December 2010 until November 2016. Mr. Raymond is the founder and majority owner of The Energy & Minerals Group (“EMG”), which is the management company for a series of specialized private equity funds. EMG was founded in 2006 and focuses on investing across various facets of the global natural resource industry including the upstream and midstream segments of the energy complex. As of September 30, 2021, EMG had approximately $12 billion of regulatory assets under management and approximately $12 billion in commitments have been allocated across the energy sector since inception. From 1998 until founding EMG, Mr. Raymond held various executive leadership positions with several energy companies, including Plains Resources Inc. (the publicly traded predecessor company to Vulcan Energy), Plains Exploration and Production Company, Kinder Morgan, Inc. and Ocean Energy, Inc. From 1992 to 1998, he was a Vice President with Howard Weil Labouisse Friedrichs, Inc. Mr. Raymond has been a direct or indirect owner of PAA’s general partner since 2001
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Operations/Engineering/ Construction

Industry Experience

Private Equity

International
 
15

 
and served on the board of PAA’s general partner from 2001 to 2005. He serves on numerous other private company boards and currently serves on the board of NGL Energy Holdings LLC, the general partner of NGL Energy Partners, L.P. Mr. Raymond received a BSM degree from the A.B. Freeman School of Business at Tulane University with dual concentrations in finance and accounting and currently sits on the board of the Business School Council. He also serves as a director on the board of the American Heart Association, as a member of the MD Anderson Cancer Center Board of Visitors and is a member of YPO. The Board has determined that Mr. Raymond is “independent” under applicable Nasdaq and SEC rules. We believe that Mr. Raymond’s experience with investment in and management of a variety of upstream and midstream assets and operations provides a valuable resource to the Board.
BOBBY S. SHACKOULS
Lead Director
Independent
PAGP/PAA Director
since 2010
Committees:
Governance (chair)
Bobby S. Shackouls, age 71, has served as a director of PAGP GP since January 2014 and as Lead Director since January 2020. Mr. Shackouls served as Chairman of Burlington Resources Inc. from 1997 until its acquisition by ConocoPhillips in 2006, and continued to serve on the ConocoPhillips Board of Directors until his retirement in May 2011. Prior thereto, Mr. Shackouls served as President and Chief Executive Officer of Meridian Oil, Inc., a wholly owned subsidiary of Burlington Resources, from 1994 to 1995, and as President and Chief Executive Officer of Burlington Resources from 1995 until 2006. Mr. Shackouls served as a director of The Kroger Co. from 1999 until January 2021, as a director of Oasis Petroleum from 2012 until November 2020, and as a director of Quintana Energy Services from January 2019 until July 2020. He served as a director and member of the audit committee of PNGS GP LLC, the general partner of PAA Natural Gas Storage, L.P., from April 2010 through December 2013. The Board has determined that Mr. Shackouls is “independent” under applicable Nasdaq and SEC rules. We believe that Mr. Shackouls’ extensive experience within the energy industry offers valuable perspective and, in tandem with his long history of leadership as the CEO of a public company, make him highly qualified to serve as a member of the Board.
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Operations/Engineering/ Construction

Industry Experience

International
CHRISTOPHER M. TEMPLE
Independent
PAGP/PAA Director
since 2009
Committees:
Compensation
HSES
Christopher M. Temple, age 54, has served as a director of PAGP GP since November 2016. He served as a director of PAA’s general partner from May 2009 until November 2016. He is President of DelTex Capital LLC (a private investment firm) and serves as a Senior Advisor to Tailwind Capital. As part of his role as a Senior Advisor with Tailwind Capital, Mr. Temple serves on the board of HMT Tank, LLC and on the board of Loenbro, Inc. He also serves on the board and is chairman of the audit committee of Owl Rock Capital Corporation, Owl Rock Capital Corporation II, Owl Rock Capital Corporation III, Owl
Board Qualifications:

Public Company Experience

Finance/Accounting

Business Development/Strategy/Commercial

Legal/Governance/ Government Relations

Industry Experience
 
16

 
Rock Core Income Corporation, Owl Rock Technology Finance Corporation, Owl Rock Technology Fund II and Owl Rock Technology Income Fund. Mr. Temple served as the President of Vulcan Capital, the private investment group of Vulcan Inc., from May 2009 until December 2009 and as Vice President of Vulcan Capital from September 2008 to May 2009. Mr. Temple served as Chairman of Brawler Industries, LLC from September 2012 to July 2016, as a director of Clear Channel Outdoor Holdings from April 2011 through May 2017, and as a director of Charter Communications, Inc. from November 2009 through January 2011. Prior to joining Vulcan in September 2008, Mr. Temple served as a managing director at Tailwind Capital LLC from May to August 2008. Prior to joining Tailwind, Mr. Temple was a managing director at Friend Skoler & Co., Inc. from May 2005 to May 2008. From April 1996 to December 2004, Mr. Temple was a managing director at Thayer Capital Partners. Additionally, Mr. Temple was a licensed CPA serving clients in the energy sector with KPMG in Houston, Texas from 1989 to 1993. Mr. Temple holds a BBA, magna cum laude, from the University of Texas and an MBA from Harvard. The Board has determined that Mr. Temple is “independent” under applicable Nasdaq and SEC rules. Mr. Temple has a broad investment management background across a variety of business sectors, as well as experience in the energy sector. We believe that this background, along with the leadership attributes indicated by his executive experience, provide an important source of insight and perspective to the Board.

Private Equity

Cybersecurity/IT
 
17

 
CORPORATE GOVERNANCE AND RELATED MATTERS
Our Management and Governance
We own a 100% managing member interest in GP LLC, which owns a non-economic general partner interest in AAP. As of March 28, 2022, we also owned, directly and through GP LLC, an 81% limited partner interest in AAP, which directly owns approximately 241.5 million of PAA’s outstanding common units (representing approximately 31% of PAA’s outstanding common units and Series A preferred units combined). AAP is the sole member of PAA GP LLC, which directly holds the non-economic general partner interest in PAA. PAGP GP holds a non-economic general partner interest in us and manages our operations and activities. We own an 83% membership interest in PAGP GP and the balance of the membership interests in PAGP GP are owned by various individuals and entities. The Board has responsibility for managing the business and affairs of PAGP, PAA and AAP.
We and our general partner have no employees. All of our officers and other personnel necessary for our business to function (to the extent not out-sourced) are employed by GP LLC. All of the officers of our general partner are also officers of GP LLC. Our general partner’s executive officers spend the substantial majority of their time managing the business of PAA, which benefits us as PAA’s performance will determine our success. We estimate that these officers spend less than 10% of their time on our business, as distinct from PAA’s business. The actual time devoted by these officers to managing our business as well as PAA’s will fluctuate as a result of the relative activity level between the two entities.
Our Class A shareholders are limited partners and do not directly or indirectly participate in our management or operation. Unlike holders of common stock in a corporation, our shareholders have only limited voting rights on matters affecting our business or governance, subject in all cases to any specific shareholder rights contained in our partnership agreement. In connection with the Simplification Transactions completed in November 2016, we expanded the voting rights of our shareholders to include the election of directors and, in 2018, we began holding annual meetings for this purpose. For a description of the steps we have taken to strengthen our governance structure and expand the voting rights of our shareholders, as well as a description of our Board structure and information regarding the election of Directors, see “Proposal 1 — Election of Class II Directors — Board and Governance Structure” above.
Board Leadership Structure and Role in Risk Oversight
Effective with the retirement of Mr. Armstrong as Chairman of the Board at the end of 2019, after carefully considering the issue over the course of several meetings, our Board determined that it was in the best interests of PAGP and PAA to re-combine the offices of CEO and Chairman of the Board, and Mr. Chiang assumed the role of Chairman of the Board while continuing to serve as CEO. The Board also approved an amendment to our governing documents that established a strong Lead Director role, requires that one of our independent directors serve as the Lead Director for so long as the CEO and Chairman roles are held by the same person, and clearly delineates the respective responsibilities of the Chairman and the Lead Director. The Board has no set policy with respect to the separation of the offices of Chairman and CEO; rather the Board believes it is in the best interests of PAA and PAGP for the Board to review ongoing conditions and circumstances and to make an appropriate determination to separate, or maintain as combined, the CEO and Chairman roles at the time a new CEO succeeds the current CEO, or upon a significant change in circumstances. In connection with the re-combination of the Chairman and CEO roles effective January 1, 2020, the Board appointed Mr. Shackouls to serve as Lead Director.
With respect to the management of enterprise-level risk (ELR), which is the process of identifying, managing and monitoring events that present opportunities and risks with respect to the operation of our business and the creation of value for our shareholders, the Board has delegated primary responsibility to management and retained oversight responsibility. Management provides a formal ELR assessment to the Board at least once every year.
We believe that our Board leadership structure supports the Board’s risk oversight function by facilitating open and regular communication between management and the directors, which allows informed oversight of management’s processes for identifying and managing significant risks and their
 
18

 
impact on PAA’s business. For example, in connection with the COVID-19 pandemic, executive management communicated and met regularly with the Board and provided numerous updates and related information to the Board regarding the assessment and management of the significant risks facing PAA and the impacts to its business resulting from the pandemic. In addition, the CEO/Chairman regularly communicates with the Lead Director to make sure the Board is receiving the information it needs and has the opportunity to provide feedback and input to management, in each case as required for the Board to discharge its oversight role with respect to the risks facing PAA and its business in the current environment.
Non-Management Executive Sessions and Shareholder Communications
Non-management directors meet in executive session in connection with each regular Board meeting. These sessions are presided over by the Lead Director. As circumstances warrant, non-management directors may also meet in executive sessions of special meetings of the Board.
Interested parties can communicate directly with non-management directors by mail in care of the General Counsel and Secretary or in care of the Vice President of Internal Audit at Plains All American Pipeline, L.P., 333 Clay Street, Suite 1600, Houston, Texas 77002. Such communications should specify the intended recipient or recipients. Commercial solicitations or communications will not be forwarded.
Independence Determinations
Because we are a limited partnership, the listing standards of Nasdaq do not require that we or our general partner have a majority of independent directors on the Board. Nonetheless, the PAGP GP LLC Agreement requires that our Board have a majority of directors who are “independent” as defined in applicable Nasdaq and SEC rules. To be considered independent under Nasdaq listing standards, our Board must determine that a director has no relationship with us that would interfere with the exercise of independent judgement in carrying out his or her responsibilities as a director. The standards specify the criteria by which the independence of directors will be determined, including guidelines for directors and their immediate family members with respect to employment or affiliation with us or with our independent public accountants. The Board has assessed the independence of the eight directors who are not current or former members of management (Messrs. Burk, McCarthy, Petersen, Raymond, Shackouls, Temple, Ziemba and Ms. Pruner) and has concluded that all of such directors are independent under applicable Nasdaq and SEC standards.
Audit Committee
Our audit committee reviews our external financial reporting, engages our independent auditors, and reviews the adequacy of our internal accounting controls. The charter of our audit committee is available on our website. See “— Meetings and Other Information” for information on how to access or obtain copies of this charter. The Board has determined that each member of our audit committee (Messrs. Burk (chair), Ziemba and Ms. Pruner) is (i) “independent” under applicable Nasdaq and SEC rules, and (ii) financially literate. The Board has also determined that each of Mr. Burk and Ms. Pruner qualifies as an “Audit Committee Financial Expert” as that term is defined in Item 407 of Regulation S-K.
Compensation Committee; Compensation Committee Interlocks and Insider Participation
Although not required by Nasdaq listing standards, we have a compensation committee that reviews and makes recommendations to the Board regarding the compensation for our executive officers and administers our long-term equity incentive plans for officers and key employees. The compensation committee has delegated limited authority to the CEO to administer our long-term incentive plans with respect to employees and non-Section 16 officers below the Senior Vice President level. The charter of our compensation committee is available on our website. See “— Meetings and Other Information” for information on how to access or obtain copies of this charter. The compensation committee currently consists of Messrs. Raymond (chair), Petersen and Temple. Under applicable Nasdaq rules, none of the members of our compensation committee are required to be “independent;” however, the charter of our compensation committee requires that all members of the committee be independent and the Board has determined that all of the current members of such committee are independent under applicable
 
19

 
Nasdaq and SEC standards. The compensation committee has the sole authority to retain any compensation consultants to assist the committee. Since 2019, the compensation committee has engaged Meridian Compensation Partners, LLC to conduct independent annual reviews and benchmark studies of our executive compensation program and practices.
During 2021, none of the members of the compensation committee was an officer or employee of ours or any of our subsidiaries, or served as an officer of any company with respect to which any of our executive officers served on such company’s board of directors. In addition, none of the members of the compensation committee are former employees of ours or any of our subsidiaries. Mr. Raymond is associated with EMG. We have ordinary course business relationships with entities affiliated with EMG; however, the Board has determined that these relationships do not impact Mr. Raymond’s independence. See “Certain Relationships and Related Transactions.”
Governance Committee
Although not required by Nasdaq listing standards, we also have a governance committee that periodically reviews our governance structure, policies and principles, oversees the Board’s annual self-assessment and committee evaluation process, and assists with succession planning and related activities, including identifying and assessing director nominees among other governance related matters. See “Proposal 1 — Election of Class II Directors — Board and Governance Structure” for additional information regarding activities of our governance committee. The charter of our governance committee is available on our website. See “— Meetings and Other Information” for information on how to access or obtain copies of this charter. The governance committee currently consists of Messrs. Shackouls (chair), Petersen and Ms. Pruner. Under applicable Nasdaq rules, none of the members of our governance committee are required to be “independent;” however, the charter of our governance committee requires that all members of the committee be independent and the Board has determined that all of the current members of such committee are independent under applicable Nasdaq and SEC standards.
HSES Committee
In February 2021, the Board established the Health, Safety, Environmental and Sustainability (“HSES”) Committee. The HSES committee assists the Board in its evaluation and oversight of our (i) management of HSES matters, including compliance with applicable laws and regulations; (ii) management of systems and plans to protect the health and safety of employees, contractors, customers, the environment, the communities where we operate, our assets, and our reputation; and (iii) plans to adjust to HSES trends and related risks to more effectively achieve our long-term business and sustainability objectives. Through the discharge of its oversight responsibilities, the HSES committee facilitates the efforts of management to further strengthen our focus on sustainability and ESG matters. The charter of our HSES committee is available on our website. See “— Meetings and Other Information” for information on how to access or obtain copies of this charter. The HSES committee currently consists of Messrs. Ziemba (chair) and Temple, both of whom are independent under applicable Nasdaq and SEC standards.
Meetings and Other Information
During 2021, our Board had five meetings, our audit committee had ten meetings, our compensation committee had four meetings, our governance committee had two meetings and our HSES committee had three meetings. In addition, members of our compensation committee and governance committee held numerous conference calls and discussions throughout the year on various compensation and governance related matters. All directors have access to members of management, and a substantial amount of information transfer and informal communication occurs between meetings. In 2021, all of our directors attended all meetings of the Board and applicable committees of the Board on which the director served, other than one director who missed one committee meeting. Board members are encouraged, but not required, to attend our annual meetings; nine Board members attended our annual meeting in 2021.
All of our standing committees have charters. Our committee charters and governance guidelines, as well as our Code of Business Conduct (which describes our Core Values) and our Code of Ethics
 
20

 
for Senior Financial Officers (which applies to our principal executive officer, principal financial officer and principal accounting officer), are available under the Structure and Governance tab in the Investor Relations section of our Internet website at http://www.plains.com. We intend to disclose any amendment to or waiver of the Code of Ethics for Senior Financial Officers and any waiver of our Code of Business Conduct on behalf of an executive officer or director either on our Internet website or in an 8-K filing. We regularly post important information on our website, including information regarding our sustainability efforts.
Conflicts Committee/Fiduciary Duties
Our partnership agreement provides for the establishment of a conflicts committee as circumstances warrant to review conflicts of interest between us and our limited partners, on the one hand, and our general partner, its owners and their respective affiliates, on the other hand. Such committee would consist of a minimum of two independent, non-employee members of the Board. Our partnership agreement provides that any matters approved by the conflicts committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by our general partner of any duties owed to us or our shareholders. See “Certain Relationships and Related Party Transactions — Review, Approval or Ratification of Transactions with Related Persons.”
Our general partner is liable for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are made specifically non-recourse to it. Our general partner has the sole discretion to incur indebtedness or other obligations on our behalf on a non-recourse basis to the general partner. Although our general partner has not exercised such discretion in the past, it may do so in the future.
 
21

 
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our executive officers (for purposes of Item 401(b) of Regulation S-K) as of the date of this proxy statement. Executive officers are appointed by the Board. There is no family relationship between any executive officer and director.
Name
Age
(as of 3/28/22)
Position
Willie Chiang* 61 Chairman of the Board and Chief Executive Officer
Harry N. Pefanis* 64 President and Director
Al Swanson 58 Executive Vice President and Chief Financial Officer
Richard K. McGee 61 Executive Vice President, General Counsel and Secretary
Chris R. Chandler 50 Executive Vice President and Chief Operating Officer
Jeremy L. Goebel 44 Executive Vice President and Chief Commercial Officer
Chris Herbold 49
Senior Vice President, Finance and Chief Accounting Officer
*
Biographical information for Messrs. Chiang and Pefanis is located under Proposal 1 — Election of Class II Directors.
Al Swanson has served as Executive Vice President and Chief Financial Officer of GP LLC since February 2011. He previously served as Senior Vice President and Chief Financial Officer from November 2008 through February 2011, as Senior Vice President — Finance from August 2008 until November 2008 and as Senior Vice President — Finance and Treasurer from August 2007 until August 2008. He served as Vice President — Finance and Treasurer from August 2005 to August 2007, as Vice President and Treasurer from February 2004 to August 2005 and as Treasurer from May 2001 to February 2004. In addition, he held finance related positions at Plains Resources including Treasurer from February 2001 to May 2001 and Director of Treasury from November 2000 to February 2001. Prior to joining Plains Resources, he served as Treasurer of Santa Fe Snyder Corporation from 1999 to October 2000 and in various capacities at Snyder Oil Corporation including Director of Corporate Finance from 1998, Controller — SOCO Offshore, Inc. from 1997, and Accounting Manager from 1992. Mr. Swanson began his career with Apache Corporation in 1986 serving in internal audit and accounting. Mr. Swanson also serves as Executive Vice President and Chief Financial Officer of PAGP GP.
Richard K. McGee has served as Executive Vice President, General Counsel and Secretary of GP LLC since February 2013. He served as Vice President, General Counsel and Secretary from March 2012 until February 2013 and served as Vice President and Deputy General Counsel from August 2011 through March 2012. He also served as Vice President — Legal and Business Development of PAA’s natural gas storage business from September 2009 through March 2012. From January 1999 to July 2009, he was employed by Duke Energy, serving as President of Duke Energy International from October 2001 through July 2009 and serving as general counsel of Duke Energy Services from January 1999 through September 2001. He previously spent 12 years at Vinson & Elkins L.L.P., where he was a partner with a focus on acquisitions, divestitures and development work for various clients in the energy industry. Mr. McGee also serves as Executive Vice President, General Counsel and Secretary of PAGP GP.
Chris R. Chandler has served as Executive Vice President and Chief Operating Officer of GP LLC since March 2019. He served as Senior Vice President — Strategic Planning and Acquisitions since joining Plains in May 2018 until March 2019. Mr. Chandler has more than 25 years of energy industry experience. Prior to joining Plains, he served in a number of leadership roles at Phillips 66, most recently as General Manager — Corporate Strategy, and previously as General Manager — Midstream Commercial and Business Development, as well as numerous leadership roles in refining. Mr. Chandler also serves as Executive Vice President and Chief Operating Officer of PAGP GP.
 
22

 
Jeremy L. Goebel has served as Executive Vice President and Chief Commercial Officer since March 2021. He previously served as Executive Vice President — Commercial of GP LLC from March 2019 until March 2021, as Senior Group Vice President — Commercial from May 2018 to March 2019, as Senior Vice President — Acquisitions and Strategic Planning from April 2017 until May 2018, as Vice President — Acquisitions and Strategic Planning from July 2015 until April 2017, as Assistant Vice President — Lease Supply from July 2014 until July 2015, and as Managing Director — Acquisitions and Strategic Planning from January 2013 until July 2014. Prior to joining Plains in 2013, he was employed by Simmons & Company International. Mr. Goebel has over 20 years of energy and investment banking experience. Mr. Goebel also serves as Executive Vice President and Chief Commercial Officer of PAGP GP.
Chris Herbold has served as Senior Vice President, Finance and Chief Accounting Officer of GP LLC since August 2021, and served as Senior Vice President and Chief Accounting Officer of GP LLC from August 2018 until August 2021. He served as Vice President — Accounting and Chief Accounting Officer from August 2010 until August 2018. He served as Controller of PAA from 2008 until August 2010. He previously served as Director of Operational Accounting from 2006 to 2008, Director of Financial Reporting and Accounting from 2003 to 2006 and Manager of SEC and Financial Reporting from 2002 to 2003. Prior to joining PAA in April 2002, Mr. Herbold spent seven years working for the accounting firm Arthur Andersen LLP. Mr. Herbold also serves as Senior Vice President, Finance and Chief Accounting Officer of PAGP GP.
 
23

 
EXECUTIVE COMPENSATION
Compensation Committee Report
The compensation committee reviews and makes recommendations to the Board regarding the compensation for our executive officers and directors. In fulfilling its oversight responsibilities, the compensation committee reviewed and discussed the following Compensation Discussion and Analysis (sometimes referred to as “CD&A”) with management and, based on such review and discussion, has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
John T. Raymond, Chairman
Gary R. Petersen
Christopher M. Temple
Compensation Discussion and Analysis*
For 2021, our Named Executive Officers (sometimes referred to as “NEOs”) include our CEO, our President, our CFO, and the three most highly compensated executive officers (other than our CEO and CFO). Our NEOs for 2021 include the following individuals:
Named Executive Officer
Title
Willie Chiang
Chairman and Chief Executive Officer
Harry Pefanis President
Al Swanson EVP and Chief Financial Officer
Richard McGee
EVP, General Counsel and Secretary
Chris Chandler EVP and Chief Operating Officer
Jeremy Goebel EVP and Chief Commercial Officer
2021 Executive Compensation Highlights
The discussion set forth below in this Compensation Discussion and Analysis describes our current approach to executive compensation and elaborates upon the various actions taken and adjustments made with respect to our executive compensation program. Highlights for 2021 include the following:

Base Salaries: NEO base salaries were unchanged from 2020; no increases were approved for 2021.

Annual Bonus: Primarily due to above-target earnings (EBITDA) and cash flow (DCF/CUE) performance in 2021, NEO bonuses paid out above target, with our CEO earning a bonus at 114% of target and our other NEOs earning bonuses at 128% of target on average.

Long-Term Incentives: We granted equity incentives to our NEOs, 50% in the form of time-based units and 50% in the form of performance-based units that can be earned based upon TSR and DCF results over a cumulative three-year performance period.
*
Our Named Executive Officers are employed by GP LLC and spend the substantial majority of their time managing the business of PAA, which benefits us as PAA’s performance will determine our success. We do not have operations that are separate from PAA and we do not separately compensate our Named Executive Officers for any services provided to us. As a result, this CD&A describes the compensation of our Named Executive Officers as it relates to their services performed on behalf of PAA.
 
24

 
Executive Compensation General Philosophy and Approach
Our executive compensation philosophy emphasizes pay for performance, at both an individual and entity level, and places a significant portion of each Named Executive Officer’s compensation at risk. We believe this approach aligns the interests of our executive officers with the interests of our equity holders and at the same time allows us to attract, motivate and retain key executives. The table below highlights some of the key features of our executive compensation program:
What We Do
What We Don’t Do

We emphasize pay for performance

Our compensation program is structured to emphasize variable, at-risk compensation (over 80% of target NEO compensation is at risk)

Our annual bonus program is 100% performance based with payout based on a formulaic framework

50% of NEO long-term equity incentives are performance based, requiring performance over a multi-year period

No single-trigger change in control protections in our long-term incentive plan grants

Compensation program design mitigates against excessive risk taking

Independent compensation consultant

Regular investor engagement on compensation and other matters

Equity Ownership Guidelines for executive officers and directors

Clawback Policy that applies to performance based cash and equity compensation
[MISSING IMAGE: tm212451d1-icon_crossbw.jpg]
No guaranteed bonuses
[MISSING IMAGE: tm212451d1-icon_crossbw.jpg]
No excise tax gross ups
[MISSING IMAGE: tm212451d1-icon_crossbw.jpg]
Directors and officers are prohibited from hedging or pledging company securities
[MISSING IMAGE: tm212451d1-icon_crossbw.jpg]
Our equity plan prohibits backdating or repricing of options
[MISSING IMAGE: tm212451d1-icon_crossbw.jpg]
We did not grant any large, out of cycle equity awards in 2021
[MISSING IMAGE: tm212451d1-icon_crossbw.jpg]
No significant perquisites for our executive officers
Shareholder Engagement
At our last annual meeting, over 97% of our voting equity holders approved our executive compensation programs. Although this “say on pay” vote is advisory and non-binding, our compensation committee and Board value the opinions of our shareholders and carefully consider the results of “say on pay” votes and direct feedback received from investors, among a variety of other factors, when making future compensation decisions for our Named Executive Officers. Our investor relations team regularly meets with investors and other stakeholders to seek input and feedback on a wide range of topics, including executive compensation. On an annual basis, as part of our ongoing investor outreach and engagement process, we actively solicit feedback from our larger investors regarding our executive compensation programs and other important matters, including our evolving governance practices and sustainability efforts. In connection with this process during 2021, we reached out to 12 of our largest investors (representing approximately 40% of our outstanding voting equity), and members of our executive and investor relations teams ultimately held individual meetings with investors representing approximately 33% of our outstanding voting equity. The meetings led to a number of follow-up calls and discussions and were generally well received. The constructive feedback and input we received during these meetings and during prior years was shared and discussed with our compensation committee and Board. As we strive for continuous improvement, receiving and incorporating this investor feedback into our decision making process is critical.
 
25

 
The design of our 2021 executive compensation program, and the actual compensation of our NEOs for 2021, did not materially change relative to 2020. Consistent with the level of equity support for our 2020 executive compensation program, investor feedback gathered during 2021 was generally supportive of our 2021 program and of the changes implemented in response to feedback gathered during extensive outreach during 2019 and 2020. The compensation committee and our management team are constantly reviewing the design of our programs to ensure that they remain aligned with investor interests and evolving best practices. We will continue to seek direct input from our investors as part of that process. The table below summarizes the key feedback we have received from our investors over the past several years and the changes we made to our executive compensation program during 2020 and 2021 in response to such feedback and related considerations:
What We Heard
What We Did
Concern that DCF/CUE performance metric in equity incentives did not require performance throughout three year grant period and allowed too long of a period (4 years) to achieve target In 2020, we changed the DCF/CUE performance metric in our long-term equity incentive awards to require performance over a full 12-quarter period vs. any trailing 4-quarter period, and we shortened the performance period to three years, eliminating the extra one-year “tail” period. These enhancements are also reflected in our 2021 long-term incentive awards.
Concern that DCF/CUE performance metric in long-term incentive awards could incentivize management to inappropriately increase leverage to meet targets Our 2020 and 2021 long-term incentive awards include a leverage modifier to mitigate this concern. Payout on cumulative three-year DCF/CUE metric is subject to increase or decrease based on comparison of leverage ratio at end of three year measurement period to the target leverage ratio established at time of grant.
Investor desire for use of a relative, returns-based performance metric in our equity incentive program In 2020, we added a relative total shareholder return metric with an absolute TSR modifier to our long-term equity incentive awards. These performance metrics were also included in our 2021 long-term incentive awards.
Investors would like to see more use of ESG metrics in our performance-based incentive programs We continue to use safety and environmental metrics in our annual bonus program and to consider further direct alignment between our sustainability strategy and executive compensation.
Concern regarding significant, out of cycle equity awards granted to CEO in 2018 (in connection with his promotion to the CEO role) and certain NEOs in 2019 (long-term retention and incentive for two individuals regarded as key to future leadership succession) The Board and compensation committee have at times used performance-based long term incentive and retention awards under special circumstances to secure and incentivize leadership talent and facilitate long-term succession efforts. We do not routinely grant out of cycle equity awards and we did not grant any special out of cycle equity awards in 2020 or 2021.
Adoption of equity ownership guidelines would be seen as a beneficial mitigant In November 2020, the Board adopted Equity Ownership Guidelines.
Adoption of clawback policy would be seen as a beneficial mitigant In November 2020, the Board adopted a Clawback Policy.
Supportive of inclusion of S&P and Alerian indices in TSR comparator group, but viewed AMNA as more appropriate index vs. AMZX S&P and AMZX indices included in TSR comparator group for 2020 long-term incentive awards; the 2021 long-term incentive awards substitute AMNA for AMZX.
 
26

 
Our Commitment to Pay for Performance
Our executive compensation philosophy is focused on a long-term pay for performance culture designed to attract and retain key management talent in a competitive industry and market. Our program combines relatively low base pay (as a percentage of total rewards) with higher variable, at-risk compensation opportunities based on objective and transparent performance requirements. As demonstrated in the graphic below, in 2021, at target, approximately 88% of our CEO’s compensation and approximately 83% of our other NEOs’ compensation consisted of at-risk compensation.
Majority of NEO Pay At-Risk and Performance-Based
[MISSING IMAGE: tm223468d1-pc_compenpn.jpg]
*
The “Other NEOs” graphic excludes Mr. Pefanis. Mr. Pefanis is a co-founder and substantial equity owner and for the last several years has requested to not participate in the long-term incentive program, which results in an at-risk compensation percentage for Mr. Pefanis of 71%.
At-risk compensation is typically tied to the achievement of one or more performance metrics that measure value creation over both the near and longer term, as well as service period requirements. The primary short-term financial metrics are annual earnings and cash flow levels as represented by Adjusted EBITDA1 and distributable cash flow (“DCF”) per common unit equivalent (“CUE”). The primary long-term performance measures included in our equity incentive grants are DCF per CUE over a 3 year period (with a leverage modifier) and relative total shareholder return (“TSR”) over a 3 year period. We believe our short- and long-term performance metrics are consistent with our overall financial strategy of reducing our leverage and generating attractive shareholder returns.
1
Earnings before interest, taxes, depreciation and amortization (including our proportionate share of depreciation of and amortization, including write-downs related to canceled projects, of unconsolidated entities), gains and losses on asset sales and asset impairments, goodwill impairment losses and gains on and impairments of investments in unconsolidated entities, adjusted for certain selected items impacting comparability.
 
27

 
We believe our pay-for-performance approach aligns the interests of our executive officers with the interests of our equity holders. We also believe that our pay-for-performance approach helps us achieve the overall objectives of our executive compensation program, which are to:

attract and retain individuals with the background and skills necessary to successfully execute our business model in a demanding environment;

pay for performance by tying a majority of NEO pay to achievement of near-term and long-term goals that drive long-term growth in unitholder value; and

directly align our NEOs with our unitholders through the use of equity incentives and encouragement of long-term unit ownership.
CEO Realizable Pay Aligned with Performance
In order to demonstrate how the design of our executive pay program is aligned with the interests of our unitholders, the table and chart below compare the potentially realizable market value of long term incentive plan awards granted to Mr. Chiang since he became CEO in 2018 to the realizable market value of such awards as of year-end 2021. The values utilized in the table and chart below are based on closing market prices of PAA’s common units to demonstrate how PAA’s unit price performance over time impacts the actual value realized and future realizable value of equity awards held by our NEOs. These values are different than the grant date fair values set forth in the summary compensation table, which are accounting-based values mandated by SEC requirements and which are calculated on the date of grant and not adjusted over time to reflect fluctuations in market price.
Since the date of Mr. Chiang’s first long term incentive plan award as CEO in August 2018, consistent with the performance of the AMZX and AMNA indices during such period, PAA’s common unit price has declined by approximately 65% through December 31, 2021 (from $26.85 per unit to $9.34 per unit). The table and chart below demonstrate that the realizable market value of Mr. Chiang’s long-term incentive plan awards over the same time period (i.e., from August 2018 through year-end 2021) has declined by approximately 44% (or 66% on an adjusted basis attributing no realizable value to Mr. Chiang’s August 16, 2018 promotion grant due to the current improbability of achieving the aggressive performance targets included in such grant that were based on pre-pandemic projections). Mr. Chiang’s experience with respect to his long-term equity awards is similar to the experience of our other NEOs during the same time period and demonstrates that there is a significant correlation and alignment between our NEOs’ long-term equity incentive compensation and the interests of our equity holders.
Realizable Market Value of CEO Long-Term Incentive Awards*
Grant Date
Units
Granted
Grant Date
Market Value(1)
Units O/S
Total
Realizable
Value of
O/S Units
as of 12/31/21(2)
12/31/21
Realizable
Value as
% of Grant
Date Market
Value
Change in
Value from
Grant Date
to 12/31/21
8/16/18 (promotion grant) 500,000 $ 13,425,000 500,000 $ 4,670,000 34.8%
-65.2%
8/15/19 (annual grant) 125,740 $ 2,683,292 125,740 $ 1,174,412 43.8%
-56.2%
8/13/20 (annual grant) 375,940 $ 2,996,242 375,940 $ 3,511,280 117.2% +17.2%
8/19/21 (annual grant) 300,600 $ 2,738,466 300,600 $ 2,807,604 102.5% +2.5%
Unadjusted Total (includes 2018 promotion grant)
1,302,280 $ 21,843,000 1,302,280 $ 12,163,296 55.7%
-44.3%
Adjusted Total (attributes no value to 2018 promotion grant)
$ 7,493,296 34.3%
-65.7%
 
28

 
*
Values in table exclude value of distributions received or payments made with respect to distribution equivalent rights (“DERs”).
(1)
Grant Date Market Value calculated by multiplying the closing price of PAA common units on the applicable grant date by number of units granted with no discount for performance thresholds or service requirements.
(2)
Equals realizable market value of outstanding unvested units based on the closing market price ($9.34) of PAA common units on December 31, 2021.    
[MISSING IMAGE: tm223468d1-bc_ceoltippn.jpg]
Compensation Elements and Objectives
We use three primary elements of compensation to achieve our executive compensation program objectives — salary, annual cash incentive awards and long-term equity incentive awards. Our mix of compensation elements is designed to reinforce near-term and long-term business and strategic objectives, recognize and reward performance, motivate long-term value creation and align the interests of our executives with those of our equity holders. The following table sets forth the key elements of our 2021 executive compensation program, which are relatively unchanged compared to 2020:
What We Pay
Why We Pay It
Key Features
Base Salary Attract and retain high-performing executives by providing a secure and appropriate level of base pay

Foundational element of our compensation program; short-term and long-term incentive compensation components are based on a percentage of base salary

Subject to adjustment periodically; smallest component of NEO compensation
 
29

 
What We Pay
Why We Pay It
Key Features
Annual Cash Incentive Awards Motivate and reward near-term performance and retention

100% performance based

Encourages achievement of objective and transparent annual business, ESG and individual goals established at beginning of year

Payout based on formulaic framework
Long-Term Equity Incentive Awards Motivate and reward long-term performance and retention and create additional alignment with investors

Long-term equity incentives are 50% performance based and 50% time based

Performance-based awards earned based upon performance over cumulative three-year period

Performance metrics include relative TSR with negative TSR modifier, and DCF/CUE with leverage modifier

DERs associated with long-term equity awards provide additional potential motivation and alignment
Employee Benefits Attract and retain talent

Customary health and welfare benefits for all U.S. employees, including 401(k) Plan

No defined benefit or pension plans

No significant perquisites
2021 Independent Benchmark Study of Executive Compensation
During 2021, our compensation committee engaged Meridian Compensation Partners, LLC (“Meridian”) to provide independent counsel, including a benchmarking review of our executive officer compensation. In connection with its engagement of Meridian, the compensation committee evaluated and confirmed Meridian’s independence relative to existing PAA or PAGP relationships or potential conflicts, in line with Nasdaq requirements.
Business consolidation and unique operating models create some challenges in identifying directly comparable peer companies. Accordingly, we take a broad view of comparability to include organizations that are similar to ours and that we believe we compete with for attracting and retaining executive talent. Our compensation benchmarking peer group for 2021 included 11 companies across a wide range of revenues, asset values and enterprise values that are primarily engaged in the midstream business in the United States (the entities in the benchmarking peer group for 2021 are listed in the table below).
Meridian utilized publicly available information to analyze compensation practices of the companies in the benchmarking peer group, including how pay is divided among long-term incentives, annual incentives, base pay and other forms of compensation. Meridian also compared the total compensation and components thereof for our executive officers to the total compensation and components thereof for the benchmarking peer group. Meridian’s benchmark study was completed in July and presented to the compensation committee in August 2021.
The compensation committee also considered similar information from a broader sample of companies in the energy sector, including upstream, refining and regulated utilities, although the benchmarking peer group listed in the table below served as the primary source of external comparative information.
The results of Meridian’s study validate our view that our 2021 NEO base salary and long-term incentive target levels are significantly lower than the median of our peer group, our aggregate cash
 
30

 
compensation levels (salary and bonus) are generally at or above the median of our peer group, and our total compensation levels (cash plus equity) are either at or below the median of our peer group for top executive roles (but are moderate relative to the larger and broader spectrum of energy industry competitors that compete for similar talent). Each component of our CEO’s 2021 compensation was at or significantly below median, with total CEO compensation falling well below median.
For a portion (25%) of our long-term incentive awards granted in 2021, we included relative TSR as a performance metric for the three-year performance period ending June 30, 2024. The entities in our 2021 benchmarking peer group and the entities and indices in our TSR Comparator Peer Group for the 2021 long-term incentive awards include the following:
Entity/Index Name (Ticker)
2021 Benchmarking
Peer Group
2021 TSR Comparator
Peer Group
Energy Transfer LP (ET)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Enterprise Products Partners LP (EPD)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Kinder Morgan Inc. (KMI)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
The Williams Companies Inc. (WMB)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
MPLX LP (MPLX)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
ONEOK Inc. (OKE)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Targa Resources Corp. (TRGP)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Magellan Midstream Partners LP (MMP)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Western Midstream Partners LP (WES)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
EnLink Midstream LLC (ENLC)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Equitrans Midstream Corporation (ETRN)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Phillips 66 Partners LP (PSXP)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
DCP Midstream LP (DCP)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Holly Energy Partners LP (HEP)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
NuStar Energy LP (NS)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
S&P 500 Index (SPX)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
Alerian Midstream Energy Index (AMNA)
[MISSING IMAGE: tm223467d1-icon_tickbw.jpg]
2021 Compensation Committee Process
Set forth below is additional information regarding our compensation practices as they relate to the elements of our compensation program:
Base Salary. Historically, we have not made regular annual adjustments to the base salaries of our Named Executive Officers (the most recent across the board adjustments were made in 2017), but we have made salary adjustments in connection with promotions or taking on increased responsibilities. No salary adjustments were approved for 2021.
Annual Cash Incentive Awards. Annual cash incentive awards for the Named Executive Officers are determined within a formulaic framework that includes an annual bonus target for each Named Executive Officer, expressed as a percentage of base salary, and the determination of an actual payout as a percentage of such target amount based on company performance relative to specific goals, and individual contributions. Annual company goals typically include financial, safety, environmental and other specified goals, and each goal, as well as the individual performance component, is assigned a weighting or percentage share of the total payout opportunity. Annual goals and objectives, as well as weightings and potential payout ranges (expressed as a percentage of target) are established at the beginning of each year and are discussed and reviewed with the Board in conjunction with the review and approval of our annual plan. Payout percentages relative to achievement of specified goals may range from 0 — 200% of an individual’s target opportunity. The final amounts that are paid may be adjusted by the compensation committee and the Board based on factors it deems relevant. Such
 
31

 
adjustments may be positive or negative depending on the circumstances. For example, in each of 2019 and 2020, based on recommendations made by our CEO, the compensation committee and Board exercised negative discretion to reduce the overall payout relative to what the bonus formula generated (see “—  2021 Performance Overview and Specific Application of Compensation Elements in 2021” for more information regarding 2021).
2021 Annual Bonus Formula
[MISSING IMAGE: tm223468d1-fc_basepn.jpg]
At the end of each year, the CEO assesses the Company’s performance relative to goals and objectives established at the beginning of the year. The CEO’s written analysis of our performance examines accomplishments and shortfalls relative to established goals and objectives and also assesses overall performance against opportunities and challenges, taking into account controllable and non-controllable factors encountered during the year. The CEO also assesses the individual performance and contributions of each NEO (other than himself) towards the satisfaction of the various goals and objectives established at the beginning of the year. The CEO submits his report and the supporting detail to the compensation committee and Board for review and comment. Based on the conclusions set forth in the annual performance assessment, the CEO submits the results of the formulaic bonus calculations along with any recommendations for adjustments to the compensation committee for all Named Executive Officers other than himself. In connection with his assessment of Company and individual performance, the CEO also considers various factors, including:

whether or not we achieved the goals established for the year and any notable shortfalls relative to expectations;

the level of difficulty associated with achieving such objectives based on the opportunities and challenges encountered during the year;

current year operating and financial performance relative to both public guidance and prior year’s performance;

significant transactions or accomplishments for the period not included in the goals for the year;

our relative prospects at the end of the year with respect to future growth and performance; and

our equity price performance and returns during the year and our positioning at the end of the year with respect to our targeted leverage metrics and credit profile.
The compensation committee may adjust the CEO’s recommendations upward or downward in its discretion. The compensation committee’s recommendations are then submitted to the Board for final review and approval.
As noted above, the CEO does not make a recommendation with respect to his own bonus. The compensation committee assesses the CEO’s performance and contributions toward meeting the
 
32

 
goals and objectives established at the beginning of the year, and recommends to the Board a total bonus payout for the CEO that it believes to be commensurate with such performance and contributions.
Long-Term Incentive Awards.   We use performance- and time-based phantom unit grants issued under our Long-Term Incentive Plans to incentivize and retain our executive officers and encourage and reward timely achievement of targeted metrics designed to align the long-term interests of the Named Executive Officers with those of our unitholders.
2021 Annual LTIP Award; Determination of Units for Annual Grants
[MISSING IMAGE: tm223468d1-fc_ltippn.jpg]
NEOs are eligible to receive an annual grant of phantom units based on a formula tied to salary and PAA’s unit price. The size of the annual grant for a specified individual is based on a designated target percentage of their base salary that takes into account their expected contribution in respect of longer term performance objectives.
Annual equity grants typically require minimum service periods of three years in order to encourage long-term retention. A phantom unit grant provides the holder with the right to receive, upon the satisfaction of vesting criteria specified in the grant, a PAA common unit (or cash equivalent). We do not use options as a form of incentive compensation. Terms of phantom unit grants may vary, but generally phantom units vest upon the later of achievement of designated performance thresholds and continued employment for a full three year period. Phantom unit grants for the Named Executive Officers typically include DERs, and for awards granted in 2021, DERs on the performance-based portion of such awards will be payable only if and to the extent the underlying phantom units vest at the end of the three-year performance period. DERs on the time-based portion of such awards accrue for the first year following the grant date, with such accrued amount being paid out on the first anniversary of the grant date, and then are paid on a quarterly basis thereafter.
An additional equity incentive tool that has been used in the past involved the issuance to executives of Class B units of AAP (“AAP Management Units”). While no AAP Management Unit awards were granted in 2021, two of our Named Executive Officers (Messrs. Chiang and Goebel) held such awards during 2021. See “Outstanding Equity Awards at Fiscal Year-End” and “Certain Relationships and Related Transactions — AAP Management Units” below for more information regarding the AAP Management Units.
2021 Performance Overview and Specific Application of Compensation Elements in 2021
At the beginning of 2021, we established key qualitative goals and quantitative financial, safety and environmental objectives. We also set important commercial, operational and organizational goals.
 
33

 
2021 Performance Objectives and Results (all figures rounded)
Quantitative Goals
Metrics
2021 Goals
2021 Results
Adjusted EBITDA1 $2.15 billion $2.213 billion2
Implied DCF per common unit and CUE1 $1.83 $1.972
Safety and Environmental 20% year over year improvement in certain safety and environmental metrics

~10% reduction in recordable injuries

~33% increase in number of federally reportable releases
Qualitative Goals

Financial: strengthen financial positioning and flexibility; complete asset sales of $750 million; achieve a total debt to Adjusted EBITDA ratio of 4.75x or lower by year end; and deliver $300 million of free cash flow after distributions (excluding proceeds from asset sales)

Investment: maintain capital discipline by limiting capital expenditures to no more than $425 million; and advance key projects that will support future growth and returns and optimize existing assets

Operations and Management: advance and complete key programs and initiatives, including convergence efforts,designed to improve the efficiency and scalability of our business processes and information systems; and advance key initiatives related to talent development/management, succession planning, employee wellness and performance management
1.
Adjusted EBITDA and Implied DCF are non-GAAP financial measures. Information regarding these non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures, is included under the caption “Non-GAAP Financial Measures” beginning on page 79 of PAA’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC.
2.
For comparison to our 2021 goals, the 2021 results reflected in the table above for Adjusted EBITDA and Implied DCF per common unit and CUE include adjustments to actual amounts reported to exclude approximately $77 million of Adjusted EBITDA attributable to noncontrolling interests in the Plains Oryx Permian Basin LLC joint venture (“Permian JV”) as the financial impact associated with the formation of the Permian JV was not included in the quantitative amounts established for our 2021 goals.
With respect to the Adjusted EBITDA results included in the table above, we exceeded our goal by 3% driven primarily by volume growth and lower operating expenses.
In addition to the results set forth in the table above, we also reported Free Cash Flow after Distributions of approximately $1.65 billion, or $780 million excluding proceeds from asset sales (vs. our goal for the year of $300 million).
We reduced our debt by more than $1 billion (and had $400 million of cash on our balance sheet as of December 31, 2021 reserved for the repayment of senior notes in March 2022); and returned approximately $695 million to common equity holders via distributions and unit repurchases. We exited the year with a total debt to Adjusted EBITDA attributable to PAA multiple of 4.5x and approximately $3.0 billion of committed liquidity. In addition, in November 2021, our credit rating with Moody’s was upgraded to investment grade with a stable outlook.
With respect to our stated goals regarding safety and environmental metrics, we did not achieve our 20% reduction targets for federally reportable releases and safety-related total recordable injury rate, experiencing a 33% increase in federally reportable releases and a 10% reduction in recordable injuries. While our 2021 results were less than desired, since 2017, we have improved our safety (TRIR) and environmental (FRR) performance by more than 50% and nearly 40%, respectively.
In developing his annual bonus compensation recommendations, our CEO primarily considered the quantitative factors and context described above. Other factors noted by our CEO as being relevant to his assessment of our 2021 performance included the following:
 
34

 

We completed the formation of the Permian JV via a cashless, debt-free and free cash flow accretive transaction;

We completed asset sales of $875 million, which exceeded our target by $125 million;

We reduced capital expenditures by approximately $230 million, or 40% relative to our initial plan;

Both our Wink-to-Webster and Capline projects commenced partial service and are positioned to commence full service and ramp up volumes in 2022;

We published our first comprehensive Sustainability Report, which included disclosure of Scope 1 and 2 emissions;

We formed a cross-functional Emerging Energy Team, led by a newly appointed VP of Emerging Energy and Process Optimization, focused on positioning PAA to evaluate and participate in emerging energy opportunities;

We formed a Health, Safety, Environmental and Sustainability Board Committee to provide enhanced oversight of our health, safety, environmental and sustainability activities and reporting; and

We enhanced our governance arrangements by amending our underlying governing documents to eliminate the lone remaining previously negotiated “director designation” right, which resulted in all directors being subject to public election and all non-management directors serving on the same basis in terms of their rights, duties and obligations.
We also continued to plan for the future within our organizational structure and made a number of changes to improve effectiveness and efficiency, including ongoing development and succession planning efforts, advancement of plans to improve internal systems and processes, and continuation of improvements in the areas of safety, integrity, environmental compliance and sustainability.
2021 Compensation Elements
For 2021, the elements of compensation were applied as described below.
Base Salary.   No salary adjustments for NEOs were recommended or made during 2021. For 2021, annual base salaries for the NEOs were as follows:
Named Executive Officer
Annual Base Salary
Willie Chiang $ 600,000
Harry Pefanis $ 400,000
Al Swanson $ 400,000
Richard McGee $ 400,000
Chris Chandler $ 400,000
Jeremy Goebel $ 400,000
Annual Cash Incentive Awards.   For 2021, annual bonus targets for the Named Executive Officers, expressed as a percentage of base salary, were as follows:
Named Executive Officer
Annual Bonus Target
(as a Percentage of Base Salary)
Willie Chiang 250%
Harry Pefanis 250%
Al Swanson 200%
Richard McGee 200%
Chris Chandler 200%
Jeremy Goebel 200%
 
35

 
The goals (and weightings) for 2021 cash incentive awards established at the beginning of the year were company performance (67% overall weighting allocated among Adjusted EBITDA (40%), DCF per common unit and CUE (40%) and safety/environmental (20%)) and individual performance (33% weighting). The minimum and maximum payout levels of 0% and 200%, respectively, for Adjusted EBITDA and DCF per common unit and CUE were set at 92.5% and 110%, respectively, of the applicable target with linear interpolation between those points, while the minimum and maximum payout levels of 0% and 200%, respectively, for safety and environmental metrics were set at 10% improvement and 30% improvement, respectively, with linear interpolation between those points. Individual performance metric payouts were determined by the compensation committee based on its assessment of individual contributions towards our 2021 goals and objectives.
The tables below reflect the weighting, payout range and actual results for each company performance metric. Individual performance scores and payout calculations are set forth below under “— Individual Performance.”
Company Performance Payout Thresholds & Ranges: (interpolate between points)
(67% weighting)
Threshold
Target
Max
2021 Formulaic Payout
Calculation
Adjusted EBITDA/DCF (% Target)
92.50% 100% 110%
Safety/Env Reduction vs. ‘20 (% Target)
-10% -20% -30%
Payout
0% 100% 200%
Company Performance Metrics
Weight
Threshold
Target
Max
Result
Payout %
Wgtd %
Adjusted EBITDA 40% $ 1,989 $ 2,150 $ 2,365 $ 2,213(1) 129% 52%
Implied DCF/Common Unit and CUE
40% $ 1.69 $ 1.83 $ 2.01 $ 1.97(1) 174% 70%
Safety (TRIR) 10% 0.34 0.30 0.27 0.39 0% 0%
Environmental (DOT releases) 10% 15 14 12 22 0% 0%
Company Performance Subtotal 121%
(1)
For comparison to our 2021 goals, the 2021 results reflected in the table above for Adjusted EBITDA and Implied DCF/Common Unit and CUE include adjustments to actual amounts reported to exclude approximately $77 million of Adjusted EBITDA attributable to noncontrolling interests in the Permian JV as the financial impact associated with the formation of the Permian JV was not included in the quantitative amounts established for our 2021 goals.
Individual Performance
As noted above, individual performance accounts for 33% of the annual bonus opportunity for our Named Executive Officers. Each officer’s individual contributions toward satisfaction of company goals and objectives is evaluated and payouts may range from 0-200% of target. During 2021, the executive leadership team successfully led the organization through a very challenging year and worked closely to achieve the vast majority of the goals set at the beginning of the year, including the sale of our gas storage assets and completion of the complex Permian JV and integration of the Oryx assets and teams into Plains. Offsetting this strong operating and financial performance was our failure to achieve our environmental and safety improvement targets. The individual payout scores for our NEOs for 2021 are set forth in the table below and take these factors into account, together with the specific items described for each NEO in the table.
 
36

 
Name
Individual Performance Highlights
Payout
Score
Willie Chiang

Overall leadership and tone setting

Investor engagement, capital allocation, ESG/sustainability

Led strategic positioning for 2021+

Ongoing Board initiatives (new HSES committee), Leadership development/succession
100%
Harry Pefanis

Significant role in structuring & negotiating JVs & divestitures

Mentor/develop key individuals

Strategic positioning for 2021+

Oversee/guide S&L execution/performance

Develop/maintain/enhance major commercial relationships
100%
Al Swanson

Finance group leadership

Drive focus on maximizing free cash flow

Financial Strategy for 2021+

Capital allocation/equity repurchase plan

Financial flexibility/committed liquidity

Maintain/improve credit ratings: Moody’s upgrade
125%
Richard McGee

Legal group leadership

Proactive/critical role for Permian JV & PNG divestiture, other transactions and key commercial arrangements

Manage/mitigate Line 901 litigation exposure

Facilitated investor engagement effort, COVID matters and governance/compensation initiatives
150%
Chris Chandler

Permian JV operational integration

COVID company and operational leadership

ESG leadership with expanded disclosure, emissions inventory, and new Emerging Energy group

Cost leadership via convergence, capital discipline, energy efficiency, and utility optimization

Co-led business segment reviews (with CCO) and development of enhanced financial planning process

Improved injury severity and continued HSE process improvements; but did not achieve HSE improvement goals and experienced two process safety incidents in Canada
135%
Jeremy Goebel

Assumed CCO role with responsibility for all commercial activities

Originated, structured and led Permian JV formation and commercial integration

Led $875MM divestiture program (+$125MM proceeds)

Co-led business segment reviews (with COO) and development of enhanced financial planning process

Led optimization efforts capturing additional value throughout asset base in challenging market

Develop/maintain/enhance major commercial relationships
195%
After applying the individual performance scores set forth in the table above ranging from 100% to 195%, the total formulaic bonus payout calculation for our NEOs ranged from 114% to 146%, as set forth in the table below.
 
37

 
Named Executive
Officer
2021 Target
Bonus
Amount
Company Results
Individual Results
Percent of
Target
Bonus
Earned
2021 Actual
Bonus
Amount(1)
Company
Score
Weight
Individual
Score
Weight
Willie Chiang $ 1,500,000 121% x 67% + 100% x 33% = 114% $ 1,720,000
Harry Pefanis $ 1,000,000 121% x 67% + 100% x 33% = 114% $ 1,150,000
Al Swanson $ 800,000 121% x 67% + 125% x 33% = 122% $ 980,000
Richard McGee $ 800,000 121% x 67% + 150% x 33% = 131% $ 1,050,000
Chris Chandler $ 800,000 121% x 67% + 135% x 33% = 126% $ 1,010,000
Jeremy Goebel $ 800,000 121% x 67% + 195% x 33% = 146% $ 1,170,000
(1)
Final amounts were rounded up to the nearest multiple of $10,000.
Long-Term Incentive Awards.   The annual LTIP targets for the Named Executive Officers, expressed as a percentage of base salary, and the value of the 2021 annual LTIP awards to the Named Executive Officers are set forth in the table below:
Named Executive Officer
Annual LTIP
Award
Target Value
(as a percentage
of base salary)
2021 Annual
LTIP Award
Value
2021 Annual
Phantom Units
Granted(1)
Time-Vested
Phantom
Units (50%)
Performance-
Vested Phantom
Units (50%)
Willie Chiang 500% $ 3,000,000 300,600 150,300 150,300
Harry Pefanis 500% n/a(2) n/a(2) n/a(2) n/a(2)
Al Swanson 300% $ 1,200,000 120,200 60,100 60,100
Richard McGee 300% $ 1,200,000 120,200 60,100 60,100
Chris Chandler 300% $ 1,200,000 120,200 60,100 60,100
Jeremy Goebel 300% $ 1,200,000 120,200 60,100 60,100
(1)
Based on a volume weighted average price per unit for the 10-trading day period beginning five days before and ending five days after the ex-dividend date for the August 2021 distribution ($9.98).
(2)
Annual LTIP grants were not awarded to Mr. Pefanis as he requested to not participate in the 2021 long-term incentive program.
The 2021 time-vested phantom units will vest (become payable 1-for-1 in PAA common units) on the August 2024 distribution date. The performance-vested phantom units will potentially vest on the August 2024 distribution date at a scaled payout range of between 0% to 200% based on:
(i)
50% Relative TSR with Negative TSR Modifier:   PAA’s TSR measured over the three-year period ending June 30, 2024 compared to the TSR of the TSR Comparator Peer Group identified on page 31 above (if PAA’s relative TSR results in a payout of over 100%, but actual TSR is negative, the payout on this portion of the award will be reduced by 25 gross percentage points, but not below 100%); and
(ii)
50% DCF per CUE with Leverage Modifier:   PAA achieving cumulative DCF per CUE of $6.00 over the three-year period ending June 30, 2024 (payout may be decreased or increased (but not above 200%) based on PAA’s leverage ratio as of June 30, 2024 compared to the target leverage ratio set forth in PAA’s multi-year plan as of August 2021).
DERs associated with the time-vested phantom units will accrue for the first year and such accrued amount will be paid in cash in a lump sum on the August 2022 distribution date; beginning in November 2022, DERs on such time-vested phantom units will be paid quarterly until the associated phantom units vest. DERs associated with the performance-vested phantom units will accrue during the three-year performance period and be paid in cash in a lump sum on the August 2024 distribution date with respect to the number of such phantom units, if any, that vest on such date. See the “Grants of Plan Based Awards Table” below for additional information regarding the 2021 annual grants.
 
38

 
Other Compensation Related Matters
Equity Ownership.   Our Named Executive Officers and directors collectively own substantial equity in PAA and PAGP. As of March 28, 2022, the Named Executive Officers beneficially owned, in the aggregate, approximately 11.0 million units of equity interests in PAA and/or PAGP with an approximate market value of $120 million, and all executive officers and directors beneficially owned, in the aggregate, approximately 79.0 million units of equity interests in PAA and/or PAGP with an approximate market value of $863 million.
Equity Ownership Guidelines.   In November 2020, the Board adopted Equity Ownership Guidelines to further align the interests of our executive officers and directors with the interests of our unitholders by requiring each to achieve and maintain a minimum equity ownership level. Under these guidelines, each executive officer and director is expected to continuously own PAA and/or PAGP securities with a value equal to a specified multiple of his or her base salary or annual cash retainer as follows:
Title
Multiple of Base Salary or Annual Cash Retainer
CEO 6x
President 5x
EVP 3x
SVP 1x
Director 5x
Executive officers and directors are expected to meet these guidelines within five years after the later of becoming subject to the guidelines or the date of adoption of the guidelines. The compliance date for current executive officers and directors is November 2025, except for Mr. McCarthy whose compliance date is August 2026. All current executive officers and directors are on track to meet the applicable guidelines on their respective compliance dates. Executive officers and directors are required to hold 100% of units/shares acquired upon vesting of phantom units or phantom shares until ownership guidelines are met (“hold until met” requirement).
Anti-Hedging and Pledging Policies.   We have policies and procedures in place that prohibit our directors and officers, including our Named Executive Officers, from using puts, calls, options or other derivative securities to hedge the economic risk of their equity ownership in us, and from engaging in other types of hedging transactions, including prepaid variable forwards, equity swaps, collars and exchange funds. Our policies also prohibit pledging company securities or holding such securities in a margin account.
Clawback Policy.   In November 2020, the Board also adopted a Clawback Policy to further align the interests of our executive officers with the interests of our unitholders, incentivize appropriate behaviors and discourage excessive risk taking. The Clawback Policy covers all executive officers and includes the following clawback triggers and related recoveries:

Fraud or intentional/unlawful conduct that contributes to a material financial restatement that results in over-payment of performance-based compensation (Company may seek recovery of any excess compensation awarded or paid); and

Detrimental conduct that results in significant financial, reputational or other harm to the Company (Company may seek recovery or forfeiture of any performance-based compensation or unvested time-based equity awards granted or paid during the 3-year period prior to discovery of the misconduct).
Change in Control Triggers.   Our long-term incentive plan grants provide for accelerated vesting upon a change of control (as defined in such agreements), but such vesting becomes operative only if the change in control is accompanied by a “change in status” ​(which includes the termination of employment by GP LLC without cause and certain other circumstances involving a voluntary separation or retirement). We believe this “double trigger” arrangement is appropriate because it provides assurance to the executive, but does not offer a windfall to the executive when there has been no real change in employment status. Pursuant to the legacy AAP Management Unit grant agreements held by
 
39

 
Messrs. Chiang (375,521 units) and Goebel (37,552 units), upon the occurrence of a change in control, any earned AAP Management Units become vested units. In addition, the provisions in Mr. Pefanis’ legacy employment agreement provide for a severance payment if he terminates employment within three months following a change in control. Mr. Pefanis agreed to a conditional waiver of these provisions with respect to all prior qualifying transactions. See “— Potential Payments Upon Termination or Change-in-Control.” The provision of severance or equity acceleration for certain terminations and change of control transactions helps to create a retention tool by assuring the executive that the benefit of the employment arrangement will be at least partially realized despite the occurrence of an event that could materially alter the employment arrangement.
Section 162(m).   With respect to the deduction limitations under Section 162(m) of the Internal Revenue Code, we are a limited partnership and do not fall within the definition of a “corporation” under Section 162(m).
Relation of Compensation Policies and Practices to Risk Management
Our compensation policies and practices are designed to provide rewards for short-term and long-term performance, both on an individual basis and at the entity level. In general, optimal financial and operational performance, particularly in a competitive business, requires some degree of risk-taking. Accordingly, the use of compensation as an incentive for performance can foster the potential for management and others to take unnecessary or excessive risks to reach targeted performance thresholds. For us, such risks would primarily attach to certain commercial merchant activities as well as to the execution of investment capital projects and acquisitions and the realization of associated returns.
From a risk management perspective, our policy is to conduct our commercial activities within pre- defined risk parameters that are closely monitored and are structured in a manner intended to control and minimize the potential for unwarranted risk-taking. We also routinely monitor and measure the execution and performance of investment capital projects and acquisitions relative to expectations.
Our compensation arrangements contain a number of design elements that serve to minimize the incentive for unwarranted risk-taking to achieve short-term, unsustainable results, including splitting the awards into a number of tranches and delaying the vesting date for various tranches, in addition to subjecting such awards to forfeiture for terminations related to violations of our risk management policies and practices or of our Code of Business Conduct. In addition, the vesting criteria for long-term incentive awards are typically based on the passage of time and performance thresholds associated with achieving specified long-term financial goals. Also, the fact that we utilize a variety of metrics in connection with our incentive arrangements (both short and long term), including a leverage modifier in the case of our long term incentive plan grants, provides a structural mitigant against excessive risk taking to achieve performance targets.
In combination with our risk-management practices and the processes employed by the compensation committee and the Board, we believe there is an adequate level of oversight with respect to the degree of risk being taken by management to achieve short and long term performance goals and we believe that risks arising from our compensation policies and practices for employees are not reasonably likely to have a material adverse effect on us.
 
40

 
Summary Compensation Table
The following table sets forth certain compensation information for our Named Executive Officers. As a result of his request to not participate in the 2021 long-term incentive program, Mr. Pefanis is not one of the three most highly compensated executive officers, but he is included as a Named Executive Officer given the significance of his role as President of Plains.
Name and Current Principal
Position
Year
Salary
($)(1)
Stock
Awards
($)(2)
Non-Equity
Incentive
Plan
Compensation
($)
All Other
Compensation
($)(3)
Total
($)
Willie Chiang 2021 600,000 2,053,850 1,720,000 18,360 4,392,210
Chairman and Chief Executive
2020 600,000 2,247,181 1,425,000 18,060 4,290,241
Officer
2019 600,000 1,273,118 2,250,000 17,760 4,140,878
Harry Pefanis 2021 400,000 1,150,000 18,360 1,568,360
President
2020 400,000 950,000 18,060 1,368,060
2019 400,000 1,500,000 17,760 1,917,760
Al Swanson 2021 400,000 821,267 980,000 18,360 2,219,627
Executive Vice President and
2020 400,000 898,896 775,000 18,060 2,091,956
Chief Financial Officer
2019 400,000 509,288 1,200,000 17,760 2,127,048
Richard McGee 2021 400,000 821,267 1,050,000 18,360 2,289,627
Executive Vice President,
2020 400,000 898,896 775,000 18,060 2,091,956
General Counsel and Secretary
2019