Richard McGee
PLAINS GP HOLDINGSAbout Richard McGee
Richard K. McGee (age 64) is Executive Vice President, General Counsel and Secretary of Plains GP Holdings’ general partner and GP LLC, serving since February 2013; prior roles include Vice President, General Counsel and Secretary (2012–2013) and Vice President & Deputy General Counsel (2011–2012), with earlier experience leading Duke Energy International and serving as general counsel at Duke Energy Services, and as a partner at Vinson & Elkins focused on energy M&A . During 2024 Plains delivered Adjusted EBITDA attributable to PAA of $2.779B (vs. $2.675B target), Implied DCF per CUE of $2.49, and strong say‑on‑pay support (~98%), with Company TSR value reaching $137.87 (from a $100 base in 2019) and net income of $1.11B, underscoring performance alignment in McGee’s incentive framework .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Plains GP/GP LLC | EVP, General Counsel & Secretary | Feb 2013–present | Oversight of legal, HR, governance and compensation initiatives; led legal support for acquisitions/JVs, and litigation risk management (e.g., Line 901) |
| PAA Natural Gas Storage business | VP — Legal & Business Development | Sep 2009–Mar 2012 | Legal/commercial leadership in natural gas storage segment |
| Duke Energy International | President | Oct 2001–Jul 2009 | Led international operations expansion and execution |
| Duke Energy Services | General Counsel | Jan 1999–Sep 2001 | Corporate legal leadership and compliance |
| Vinson & Elkins LLP | Partner (Energy M&A) | 12 years (dates not specified) | Transactions (A&D, development) for energy clients |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 512,500 | 550,000 | 550,000 |
| Target Bonus (% of Salary) | — | — | 150% |
| Actual Bonus Paid ($) | 1,515,000 | 1,180,000 | 1,100,000 |
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Weight | Target | Actual | Payout % | Weighted Contribution |
|---|---|---|---|---|---|
| Adjusted EBITDA attributable to PAA ($MM) | 40% | 2,675 | 2,779 | 152% | 61% |
| Implied DCF per CUE ($/unit) | 40% | 2.44 | 2.49 | 127% | 51% |
| Safety (TRIR) | 10% | 0.25 | 0.25 | 75% (incl. -25 bps adjustment) | 7.5% |
| Environmental (FRR) | 10% | 15 | 19 | 89% (incl. +25 bps adjustment) | 8.9% |
| Company Performance subtotal | — | — | — | 128% | — |
| Individual Performance (McGee) | 40% | — | — | 140% | — |
| Total Bonus Payout (% of Target) | — | — | — | 133% | — |
McGee’s individual highlights: legal/HR oversight during an active year; leadership on acquisitions/JVs/commercial arrangements; mitigation/resolution of Line 901 and other litigation; governance/compensation initiatives .
Long‑Term Equity Incentives
| Grant Year | Type | Units (Target) | Vesting & Measurement | DERs |
|---|---|---|---|---|
| 2024 | Time‑based Phantom Units | 54,000 | Vest Aug 2027 distribution date | Accrue 1 year; paid Aug 2025 then quarterly thereafter |
| 2024 | Performance‑based Phantom Units | 54,000 | Vest Aug 2027; 0–200% based on: 50% Relative TSR vs midstream peers (3‑yr to 6/30/2027; negative TSR modifier) and 50% cumulative DCF/CUE $7.75 (leverage ratio downward modifier) | Accrue during period; lump‑sum paid Aug 2027 for vested units |
| 2023 | Time‑based Phantom Units | 51,075 | Vest Aug 2026; DERs accrue year 1 then quarterly | |
| 2023 | Performance‑based Phantom Units | 51,075 | Vest Aug 2026; 0–200% based on 50% Relative TSR (to 6/30/2026; negative TSR modifier) and 50% cumulative DCF/CUE $7.45 (leverage modifier) | Accrue; lump‑sum Aug 2026 for vested units |
| 2022 | Time‑based Phantom Units | 69,300 | Vest Aug 2025; DERs accrued, then quarterly | |
| 2022 | Performance‑based Phantom Units | 69,300 | Vest Aug 2025; 0–200% (50% Relative TSR to 6/30/2025; negative TSR modifier; 50% cumulative DCF/CUE $7.05; leverage cap at 3.5x) | Accrue; lump‑sum Aug 2025 for vested units |
2024 annual LTIP target value set at 350% of base salary; grant valued at $1,925,000, with 108,000 total units split 50/50 time/performance .
Multi‑Year Compensation Summary (Total and Mix)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards ($) | 1,237,005 | 1,153,018 | 1,406,160 |
| Non‑Equity Incentive ($) | 1,515,000 | 1,180,000 | 1,100,000 |
| All Other ($) | 19,140 | 20,640 | 21,540 |
| Total ($) | 3,283,645 | 2,903,658 | 3,077,700 |
Equity Ownership & Alignment
Beneficial Ownership (Voting Classes)
| Security Class | Shares | % of Class |
|---|---|---|
| Class B Shares | 429,346 | 1.2% |
| Class C Shares (pass‑through voting) | 499,166 | <1% |
- Equity Ownership Guidelines: EVPs must hold 3× base salary; compliance date for current executives is November 2025, with “hold until met” requirement; all executives on track or met .
- Anti‑hedging/pledging: directors and officers prohibited from hedging or pledging company securities; no pledging by directors/NEOs noted as of March 24, 2025 .
Unvested Equity and Upcoming Vesting (Potential Selling Pressure)
| Grant | Units Unvested | Vest Date | Market/Payout Value Basis |
|---|---|---|---|
| 2022 Time‑based | 69,300 | Aug 2025 | $1,183,644 at $17.08/unit (12/31/2024) |
| 2022 Performance‑based (Target) | 69,300 | Aug 2025 (0–200% payout) | $1,183,644 at target |
| 2023 Time‑based | 51,075 | Aug 2026 | $872,361 at $17.08/unit |
| 2023 Performance‑based (Target) | 51,075 | Aug 2026 (0–200% payout) | $872,361 at target |
| 2024 Time‑based | 54,000 | Aug 2027 | $922,320 at $17.08/unit |
| 2024 Performance‑based (Target) | 54,000 | Aug 2027 (0–200% payout) | $922,320 at target |
DERs payable in lump sums at vesting for performance awards (Aug 2025/26/27) and quarterly for time‑based after first year; these events can create transactional liquidity needs (e.g., tax withholding) .
Employment Terms
- Employment and Role: EVP, General Counsel and Secretary since Feb 2013; executive officers appointed by the Board; employed by GP LLC .
- Confidentiality / Non‑Solicit: McGee agreed to maintain confidentiality and not solicit customers for two years after termination .
- Clawback: Policy (amended Nov 2023) requires recovery for material financial restatements (mandatory) and allows recovery/forfeiture for detrimental conduct causing significant harm within 3 years prior to discovery .
- Change‑of‑Control and Vesting: Long‑term awards use “double trigger” via “change in status” (e.g., termination without cause within protected period, or retirement on approved terms) for full vesting on next distribution date .
- Potential Payments upon Termination (as of 12/31/2024):
- Death/Disability: equity compensation vesting valued at $4,112,010 .
- Company without Cause: equity compensation vesting valued at $2,678,682 .
- Change in Control or Retirement: equity compensation vesting valued at $5,956,650 .
- Pension/Deferred Compensation/Perquisites: No defined benefit pension or nonqualified deferred compensation plans; 401(k) match ($20,700 included in “All Other” for 2024) and group term life insurance premium .
Compensation Structure Analysis
- Increased equity at‑risk: 2024 annual LTIP targets raised from 275% to 350% of base salary for McGee, increasing performance‑linked exposure (TSR and DCF/CUE with leverage modifier) .
- Formulaic, metric‑driven annual bonus: Company performance 60% (Adjusted EBITDA, DCF/CUE, TRIR, FRR) and individual performance 40%; McGee’s 2024 payout was 133% of target, reflecting 140% individual score and 128% company subtotal .
- Governance protections: Double‑trigger vesting, anti‑hedging/pledging, robust clawback, and hold‑until‑met ownership guidelines signal alignment and risk control .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑pay approval ~98% at 2024 annual meeting; average ~98% over last four years; ongoing investor engagement on compensation .
Performance & Track Record
- 2024 delivery vs goals: Adjusted EBITDA exceeded plan (+4% to $2.779B), Implied DCF/CUE slightly above plan ($2.49 vs $2.44), with leverage at ~3.0× and Moody’s upgrade; safety TRIR met target, FRR above target though volumes lower than 5‑year average .
- Strategic execution: Seven bolt‑on acquisitions in 2024/early 2025; Permian long‑haul recontracting; NGL debottlenecking; capital discipline and flexibility maintained .
Equity Ownership & Plan Governance
- PAGP Long Term Incentive Plan: phantom shares with DERs; no options historically issued; plan share limits and administration by Compensation Committee/Board .
Investment Implications
- Alignment: High proportion of at‑risk, metric‑linked compensation (TSR and DCF/CUE) plus ownership guidelines, clawback, and anti‑hedging/pledging policies align McGee with long‑term value creation and risk controls .
- Near‑term vesting cadence: Significant phantom unit vestings in Aug 2025/26/27 (with DER lump‑sum payments) can create transactional activity (e.g., tax‑related selling), but policies prohibit hedging/pledging and require holding until ownership guidelines are met, tempering misalignment risk .
- Retention risk: Strong governance (double‑trigger vesting) and meaningful equity acceleration upon change‑in‑status provide retention/continuity incentives (equity acceleration values as disclosed), reducing abrupt departure risk for key executives .
- Pay‑for‑performance credibility: Robust say‑on‑pay support (~98%) and transparent metric targets/payouts support investor confidence in compensation design .