Business Context and Reporting Period
DT Midstream, Inc. filed this Form 8-K on July 1, 2021, reporting events occurring primarily on June 25 and July 1, 2021. The filing documents the completion of DT Midstream’s separation from DTE Energy and its launch as an independent, publicly traded natural gas infrastructure company. The spin-off became effective at 12:01 a.m. Eastern Time on July 1, 2021, and the company’s common stock began regular-way trading on the New York Stock Exchange under the symbol DTM.
- DTE Energy distributed 96,732,466 DT Midstream shares to its shareholders.
- Shareholders received one DT Midstream share for every two DTE Energy common shares held as of June 18, 2021.
- DTE Energy retained no ownership interest following the distribution.
Financial Metrics and Liquidity
The filing does not provide historical or current revenue, net income, cash flow, margins, debt, liquidity, or balance-sheet amounts. It references 2021 operating earnings guidance and projected Adjusted EBITDA in the accompanying press release, but the guidance amounts are not included in the provided filing text.
The company states that it cannot provide reconciliations to comparable GAAP earnings or projected Adjusted EBITDA because future non-recurring items, mark-to-market adjustments, discontinued operations, impairments, divestiture costs, acquisition costs, and accounting changes cannot be forecast reliably and could materially affect reported results.
Material Changes Versus the Prior Comparable Period
- DT Midstream changed from a wholly owned DTE Energy subsidiary to an independent public company.
- The company entered into separation, transition-services, tax, and employee matters agreements with DTE Energy dated June 25, 2021.
- The Board expanded from two to seven directors.
- New amended and restated certificate of incorporation and bylaws became effective July 1, 2021.
- The company adopted an Annual Incentive Plan and entered into severance and change-in-control agreements with certain executives.
Governance, Compensation, and Outlook
Robert Skaggs, Jr. became Executive Chairman; David Slater became President and Chief Executive Officer; Jeffrey Jewell became Executive Vice President, Chief Financial Officer and Chief Accounting Officer; and other executive appointments were made effective July 1, 2021. The board established Audit, Corporate Governance, Environmental, Social and Governance, Finance, and Organization and Compensation committees.
Change-in-control agreements provide specified severance benefits if covered executives are terminated without cause or resign for good reason within two years after a change in control. For David Slater, the primary severance multiple is 200%, plus an additional amount equal to 100% of base salary plus annual bonus for a one-year noncompetition obligation. For Jeffrey Jewell, the primary multiple is 200% during the first 36 months after July 1, 2021 and 150% thereafter, plus an additional amount equal to 50% of base salary plus annual bonus.
Separate severance agreements provide lump-sum benefits equal to 200% of base salary plus target annual bonus for Mr. Slater and 100% for Mr. Jewell, subject to the terms described in the agreements. The Annual Incentive Plan bases awards on company financial and strategic goals and individual performance.
Important Facts to Verify
- Review the full Separation and Distribution Agreement and related transition-services, tax, and employee matters agreements for ongoing obligations and potential liabilities.
- Confirm the 2021 operating earnings and Adjusted EBITDA guidance amounts in Exhibit 99.1, which are not stated in the provided text.
- Assess the company’s post-spin-off debt, liquidity, capitalization, and standalone cash-flow profile in subsequent periodic filings.
- Review the amended charter and bylaws for shareholder rights, board classification, and takeover-related provisions.
- Evaluate potential executive severance and change-in-control exposure under Exhibits 10.4 and 10.5.
- Consider the uncertainty in reconciling non-GAAP guidance to GAAP results because of potentially material unusual and non-recurring items.