Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related SHAREholder Matters and Issuer Purchases of Equity Securities
Stock Market Information
Our Class A Shares are listed on the New York Stock Exchange and are traded under the symbol “HESM”.
Holders
As of December 31, 2023, there were 10 shareholders of record who owned a total of 68,367,647 of our Class A Shares, one of which is Hess Midstream GP LP. The number of holders does not include the holders for whom shares are held in a “nominee” or “street” name. In addition, as of December 31, 2023, Hess Midstream GP LP owned an aggregate of 145,620,222 Class B Shares and Hess owned directly an aggregate of 12,321,219 Class B Shares. Hess and GIP indirectly own the Class A Shares and Class B Shares owned by Hess Midstream GP LP.
Securities Authorized for Issuance Under Equity Compensation Plans
In 2017, the Partnership adopted the Hess Midstream Partners LP 2017 Long-Term Incentive Plan. Pursuant to the Restructuring, the Company assumed the Hess Midstream Partners LP 2017 Long-Term Incentive Plan and all obligations with respect to outstanding awards thereunder. The Company amended and restated the Hess Midstream Partners LP 2017 Long-Term Incentive Plan to, among other things, change the plan’s name to the Hess Midstream LP 2017 Long-Term Incentive Plan (the “LTIP”) and to reflect the Company’s assumption of the plan. The LTIP limits the number of shares that may be delivered pursuant to vested awards to 3,000,000 Class A Shares.
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plan as of December 31, 2023:
Number of securities to be
Weighted-average
Number of securities
issued upon exercise of
exercise price of
remaining available for
outstanding options,
outstanding options
future issuance under
Plan category
warrants, and rights
warrants, and rights
equity compensation plans
Equity compensation plans not approved
by security holders (1)
-
-
-
Hess Midstream LP 2017 Long Term
Incentive Plan
103,377 (2)
$
-
2,448,976
Total
103,377
$
-
2,448,976
(1) The general partner of our predecessor adopted the Long-Term Incentive Plan in connection with the IPO.
(2) The amount includes 103,377 phantom unit awards that vest ratably over a three-year period for officers and employees, and vest after one year for directors following the date of grant. Upon vesting, each phantom unit is paid in the form of a Class A Share in us, or an equivalent amount of cash, subject to applicable tax withholdings.
Distributions of Available Cash
General
Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to shareholders of record on the applicable record date. Except for splits and combinations as contemplated by our partnership agreement, no distribution shall be made under any circumstances in respect of any Class B Shares or our general partner interest.
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The following table sets forth the cash distributions per share declared on the Class A Shares, for the three most recent years through December 31, 2023:
Quarterly Cash
Three most recent years
Distribution per Share (1)
March 31, 2021
$
0.4526
June 30, 2021
$
0.5042
September 30, 2021
$
0.5104
December 31, 2021
$
0.5167
March 31, 2022
$
0.5492
June 30, 2022
$
0.5559
September 30, 2022
$
0.5627
December 31, 2022
$
0.5696
March 31, 2023
$
0.5851
June 30, 2023
$
0.6011
September 30, 2023
$
0.6175
December 31, 2023
$
0.6343
(1) Represents a cash distribution attributable to the quarter-end pursuant to our partnership agreement. See definition of Available Cash below.
Definition of Available Cash
Available cash generally means, for any quarter, all cash and cash equivalents on hand at the end of that quarter:
• less , the amount of cash reserves established by our general partner to:
• provide for the proper conduct of our business (including reserves for our future capital expenditures and anticipated future debt service requirements);
• comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any group member is a party or by which it is bound or its assets are subject;
• provide funds for distributions to our shareholders for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the establishment of such reserves will prevent us from distributing the minimum quarterly distribution on all Class A Shares for the current quarter);
• plus , if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter or available to be borrowed as a working capital borrowing as of the date of determination of available cash.
The purpose and effect of the last bullet point above is to allow our general partner, if it so decides, to use cash from working capital borrowings made after the end of the quarter but on or before the date of determination of available cash for that quarter to pay distributions to shareholders. Under our partnership agreement, working capital borrowings are generally borrowings that are made under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners and with the intent of the borrower to repay such borrowings within twelve months with funds other than from additional working capital borrowings.
Intent to Distribute the Minimum Quarterly Distribution
Under our current cash distribution policy, we intend to make a minimum quarterly distribution to the holders of our Class A Shares of $0.30 per share, or $1.20 per share on an annualized basis, to the extent we have sufficient available cash after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our general partner. However, there is no guarantee that we will pay the minimum quarterly distribution on our Class A Shares in any quarter. The amount of distributions paid under our cash distribution policy and the decision to make any distribution will be determined by our general partner, taking into consideration the terms of our partnership agreement.
General Partner Interest
Our general partner owns a non-economic general partner interest in us and, as of December 31, 2023, 898,000 Class A Shares and 145,620,222 Class B Shares. Our general partner, in its capacity as a shareholder, is entitled to share in cash distributions on our Class A Shares, but is not otherwise entitled to receive cash distributions with respect to its general partner interest in us or its Class B Shares. However, our general partner may in the future own other equity interests in us and may be entitled to receive distributions on any such interests.
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Adjustment of the Minimum Quarterly Distribution
If we combine our shares or other interests in us (“Company Interests”) into fewer shares or Company Interests (commonly referred to as a “reverse split”) or subdivide our shares or Company Interests into a greater number of shares or Company Interests (commonly referred to as a “split”), we will proportionately adjust the minimum quarterly distribution.
For example, if a two-for-one split of Class A Shares should occur, the minimum quarterly distribution would be reduced to 50% of its initial level. We will not make any adjustment by reason of the issuance of additional shares or Company Interests for cash or property (including additional Class A Shares issued under any compensation or benefit plans).
ITEM 6. [RESERVED]
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