Summary
ONEOK Inc. (OKE) filed an 8-K on February 21, 2024, detailing adjustments made to its Annual Officer Incentive Plan (the 'Plan') for fiscal year 2023. These modifications were implemented to neutralize the financial impact of its significant acquisition of Magellan Midstream Partners, L.P. (Magellan). The primary adjustments focused on the calculation of Earnings Per Share (EPS) and Return on Invested Capital (ROIC) for the legacy ONEOK business. Specifically, EPS and ROIC calculations for incentive purposes will now be based on legacy ONEOK business performance, excluding the full year's impact of the Magellan acquisition. The adjusted metrics also exclude transaction costs associated with the Magellan deal, such as advisory fees and severance, and account for the borrowing costs and any related interest income from the cash portion of the purchase price. The company's Board of Directors finalized and approved incentive payouts under this modified framework on February 20 and 21, 2024, ensuring that executive compensation aligns with the performance of the core ONEOK operations, separate from the acquisition's immediate financial effects.
Key Highlights
- 1ONEOK modified its 2023 Annual Officer Incentive Plan to isolate the financial impact of the Magellan Midstream Partners acquisition.
- 2Adjustments were made to the calculation of Earnings Per Share (EPS) and Return on Invested Capital (ROIC) for incentive payout purposes.
- 3EPS and ROIC metrics now focus on the performance of the legacy ONEOK business, excluding post-acquisition full-year financial results.
- 4Transaction costs related to the Magellan acquisition, including advisory fees and severance, have been excluded from incentive calculations.
- 5The impact of financing the Magellan acquisition, both interest expense and income, has been adjusted for in the incentive metrics.
- 6Safety and environmental performance measures (Total Recordable Incident Rate and Agency Reportable Environmental Event Rate) remained unchanged.
- 7The Board of Directors approved the final incentive payouts under these modified metrics on February 20-21, 2024.