J. Heath Deneke
About J. Heath Deneke
J. Heath Deneke is 51 and has served as Chairman of the Board, President and Chief Executive Officer of Summit Midstream Corporation since August 2024; he previously served as President & CEO and director of the general partner since September 2019. He holds a bachelor’s degree in Mechanical Engineering from Auburn University and has deep midstream operating and commercial experience from Crestwood and El Paso/Tennessee Gas/Southern Natural Gas . Under his leadership, 2024 was a transformative year: Summit divested Northeast assets (Utica and Mountaineer), refinanced debt, and closed the Tall Oak acquisition, reducing leverage to ~3.9x by year-end; consolidated revenues were $429.6M (down 6% YoY) and total segment adjusted EBITDA was $239.0M . Pay-versus-performance disclosure shows CEO “compensation actually paid” rose to $14.34M in 2024 alongside reported total shareholder return of 170.18 per SEC methodology .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Summit Midstream Corporation / General Partner | Chairman, President & CEO; Director | CEO of Corporation since Aug-2024; CEO of General Partner since Sep-2019 | Led corporate reorganization, asset sales and Tall Oak acquisition; board leadership |
| Crestwood Equity Partners LP / Crestwood Midstream Partners LP | EVP & COO | Aug-2017 to Apr-2019 | Oversaw commercial development/operations across major basins |
| Crestwood Pipeline Services Group | President & COO | Jun-2015 to Aug-2017 | Ran midstream businesses in Marcellus, Bakken, PRB, Niobrara, Utica, Permian, etc. |
| Crestwood Natural Gas Business Unit | President | Oct-2013 to Jun-2015 | Led natural gas unit strategy and operations |
| El Paso Corp. affiliates (Tennessee Gas Pipeline; Southern Natural Gas) | VP Project Dev & Engineering; Director Marketing & Asset Optimization; Manager Business Dev & Strategy | Pre‑2012 | Project development, marketing/optimization and business strategy roles |
External Roles
No other public-company board roles for Deneke are disclosed in the proxy .
Fixed Compensation
| Element | 2024 | 2023 |
|---|---|---|
| Base salary ($) | 676,000 | 650,000 |
| Target annual bonus (% of base) | 150% | N/A |
| Target annual bonus ($) | 1,014,000 | N/A |
| Target LTIP (% of base) | 405% | N/A |
| Target total direct compensation ($) | 4,427,800 | N/A |
| Other compensation ($) | 50,209 (HSA, tax prep, 401k) |
Perquisites noted include company contributions to HSA ($600 in 2024), tax preparation services ($15,177), and 401(k) employer contributions ($17,250) .
Performance Compensation
Annual Incentive (Cash)
| Metric | Weighting | Target | Actual | Payout ($) | Notes |
|---|---|---|---|---|---|
| Adjusted EBITDA | Part of SLT Scorecard | Not disclosed | Not disclosed | 1,457,625 | Annual bonus formula = Target bonus × SLT Scorecard achievement × Individual goals; SLT metrics: adj. EBITDA, business development activity, HSER goals |
| Business development activity | Part of SLT Scorecard | Not disclosed | Not disclosed | — | As above |
| HSER metrics | Part of SLT Scorecard | Not disclosed | Not disclosed | — | As above |
Long-Term Incentive Plan (Equity-based RSUs/PSUs)
2024 annual LTIP awards were split 40% performance-based and 60% time-based, with three-year performance and service vesting; awards carry dividend/distribution equivalent rights payable at vest .
| Grant date | Award type | Units (#) | Grant value ($) | Vesting |
|---|---|---|---|---|
| 1/18/2024 | Performance-based RSUs (at target) | 65,509 | Included in $2,737,800 LTIP value | 3-year performance (2024–2026) |
| 1/18/2024 | Time-based RSUs | 98,263 | Included in $2,737,800 LTIP value | One-third annually over 3 years; first tranche on 1/18/2025 |
Performance-based RSU metrics and payout grid:
| Metric | Weight | Threshold | Target | Max |
|---|---|---|---|---|
| Leverage ratio (Total Net Leverage per Credit Agreement) | 50% | ≥5.50x = 0% | 4.0x = 100% | ≤3.75x = 200% |
| Relative total unitholder/shareholder return vs peer group | 50% | 25th percentile = 50% | 50th percentile = 100% | ≥75th percentile = 200% |
Stock vested in 2024:
| Shares vested (#) | Value realized ($) |
|---|---|
| 170,385 | 3,143,603 |
Equity Ownership & Alignment
- Beneficial ownership: 266,170 shares of common stock (2.2% of class; 1.4% combined voting power) as of April 1, 2025 .
- Equity holding guidelines: CEO required to hold 3× base salary; as of Dec 31, 2024 all covered executives/directors exceeded guidelines (holdings include unvested LTIP grants) .
- Hedging/speculative trading: Insider Trading Policy discourages speculative trading (e.g., buying/writing options) .
- Options: Company does not currently grant stock options/SARs; no timing policy required; would evaluate if options were introduced .
Outstanding equity awards (12/31/2024, market value at $37.78/share):
| Grant date | Type | Unvested/Unearned (#) | Market/Payout value ($) |
|---|---|---|---|
| 1/18/2024 | Performance-based RSUs (target) | 65,509 | 2,474,930 |
| 1/18/2024 | Time-based RSUs | 98,263 | 3,712,376 |
| 3/15/2023 | Performance-based RSUs (target) | 60,030 | 2,267,933 |
| 3/15/2023 | Time-based RSUs (unvested portions) | 60,030 | 2,267,933; vest 50% on 3/15/2025 and 50% on 3/15/2026 |
| 12/9/2022 | RSUs | 25,993 | 982,016 |
| 3/14/2022 | RSUs | 17,934 | 677,547 |
Vesting schedules:
- 2024 time-based RSUs vest one-third annually beginning 1/18/2025 .
- 2023 time-based RSUs vest ~50% on 3/15/2025 and ~50% on 3/15/2026 .
Employment Terms
| Term | Deneke |
|---|---|
| Agreement effective date / initial term | Aug 1, 2024 / through Aug 1, 2025; auto-renews annually unless non-renewal notice ≥30 days before expiration |
| Base salary | $676,000 |
| Annual bonus | 0–300% of base; target 150% |
| Annual equity (LTIP) target | 405% of base; value may vary at Board discretion based on performance |
| Perqs | Tax prep/advisory up to $12,000/year; YPO dues up to $15,000/year |
| Pro-rated bonus on certain terminations | Pro-rated at target on death, disability, employer non-renewal, or qualifying termination (good reason / without cause) |
| Severance (Employer non-renewal or Qualifying Termination) | 3× (base + higher of target bonus or prior year actual), paid in installments over ~12 months; subsidized COBRA ≤18 months; clawback if cause existed |
| Non-compete / Non-solicit | Non-compete through first anniversary of termination (can waive by foregoing severance portion); non-solicit one-year; perpetual confidentiality |
| Change-in-control (CIC) treatment | Pre-agreement equity fully vests immediately prior to CIC; 2023+ awards vest only if not continued/assumed/substituted; performance units scored to CIC date; excise-tax cutback (Section 4999) to maximize after-tax benefits |
Potential payments on termination/CIC (modeled at 12/31/2024):
| Trigger | Salary ($) | Bonus ($) | Pro-rata bonus ($) | Health ($) | Equity acceleration ($) | Total ($) |
|---|---|---|---|---|---|---|
| Death/Disability | — | — | 1,014,000 | — | 12,390,037 | 13,437,647 |
| Without cause / Good reason / Nonextension | 2,028,000 | 3,042,000 | 1,014,000 | 33,610 | 12,390,037 | 18,507,647 |
| Change in control | 2,028,000 | 3,042,000 | 1,014,000 | 33,610 | 12,390,037 | 18,474,037 |
Clawbacks, risk and tax:
- Compensation Committee administers Policy for Recovery of Erroneously Awarded Compensation; programs designed to avoid excessive risk-taking; bonuses capped .
- No Section 409A tax gross-ups; excise tax cutback applies to parachute payments under Section 4999 .
Board Governance
- Role: Chairman of the Board; Class II Director (term expires 2026); not independent .
- Dual-role mitigants: Independent Lead Director (James J. Cleary) presides over executive sessions and serves as liaison to independent directors; clearly defined responsibilities; board reevaluates leadership structure periodically .
- Committees: Audit, Compensation, and Nominating/Governance/Sustainability exist; Deneke serves on none; committee chairs: Audit (Jerry L. Peters), Compensation (J. Lee Jacobe), Nominating/Governance/Sustainability (Marguerite Woung‑Chapman) .
- Attendance: Each board member attended all quarterly board and committee meetings during 2024; no director attended fewer than 75% of aggregate meetings .
- Director compensation plan: Independent directors receive $100,000 cash retainer plus equity with target grant-date value $110,000; chair retainers: Audit $20k, Compensation $15k, Nominating $15k; Lead Director $20k; Deneke received no additional director compensation .
Director Compensation (Deneke as Director)
| Item | Amount |
|---|---|
| Additional director fees (cash) | None |
| Additional director equity grants | None |
Performance & Track Record
| Metric | 2024 | 2023 |
|---|---|---|
| Total revenues ($000s) | 429,619 | 458,903 |
| Segment adjusted EBITDA ($000s, total of reportable segments) | 239,037 | 291,766 |
| Net cash provided by operating activities ($000s) | 61,771 | 126,906 |
| Leverage ratio (company commentary) | ~3.9x at YE 2024 | N/A |
| CEO Pay vs Performance: Compensation actually paid ($) | 14,341,939 | 5,301,255 |
| CEO Pay vs Performance: Total Shareholder Return | 170.18 | 80.68 |
Strategic actions under Deneke (2024): completed $625M Utica sale and $70M Mountaineer sale; divested Ohio Gathering; refinanced debt, issued 2029 secured notes; acquired Tall Oak Midstream (Arkoma Basin) to expand processing capacity and reduce leverage; positioned for potential capital returns in 2025 .
Compensation Peer Group (Benchmarking)
The 2024 peer group used for executive compensation benchmarking included Archrock, Aris Water Solutions, Crestwood Equity Partners, DT Midstream, EnLink Midstream, Equitrans Midstream, Genesis Energy, Kodiak Gas Services, NGL Energy Partners, NuStar Energy, Targa Resources, Tidewater Midstream & Infrastructure, USA Compression Partners, and USD Partners; Willis Towers Watson served as independent compensation consultant since 2019; targets generally set near market median .
Equity Ownership & Alignment Commentary
- Ownership guidelines: CEO 3× base salary; all covered leaders exceeded guidelines as of 12/31/24—supportive of “skin-in-the-game” alignment .
- No stock options granted; equity mix heavily RSU/PSU with 3-year horizons; 2024 eliminated single-trigger CIC vesting on new awards, tightening alignment and retention .
- Significant unvested PSUs and RSUs create multi-year retention hooks and potential supply overhang around vest dates; distribution/dividend equivalents add cash at vest .
Employment & Contracts Analysis
- Strong severance protection (3× salary+bonus) with one-year non-compete that can be waived for forfeiture of severance portion—balances retention vs. mobility; excise-tax cutback avoids gross-ups .
- CIC mechanics: legacy awards vest on CIC; 2023+ awards require lack of continuation/assumption (double-trigger effect), and PSUs score performance to CIC date—limits windfalls while preserving earned value .
Investment Implications
- Pay-for-performance alignment: 85% of CEO’s target total direct compensation is at-risk with LTIP at 62%—and PSU metrics tied to leverage reduction and relative TSR should incentivize deleveraging and competitive equity performance; 2024 actual bonus paid ($1.46M) reflects execution on strategic initiatives .
- Retention risk low near term: large outstanding RSUs/PSUs with 2025–2026 vest dates and robust severance protections reduce near-term turnover risk; however, vesting events can create selling pressure, particularly given sizeable 2024–2026 schedules .
- Governance: CEO/Chair dual role mitigated by strong Lead Director structure and independent committee leadership; no director pay to Deneke avoids double-compensation optics .
- Capital allocation and leverage: PSU leverage targets (≤3.75x for max payout) plus 2024 actions that brought leverage to ~3.9x suggest continued focus on debt reduction and FCF; Tall Oak integration and gas exposure shift support 2025 capital return optionality discussed by management .