CNX RESOURCES CORP filed this DEF 14A on 3/21/2024
Back to Results Entire Filing Printer Friendly Outline
CNX RESOURCES CORP - DEF 14A - 20240321 - PROXY_STATEMENT

Proxy Statement

 

We are providing the enclosed proxy materials to you in connection with the solicitation by the Board of Directors (the “Board”) of CNX Resources Corporation (“CNX” or the “Corporation”) of proxies to be voted at the Annual Meeting of Shareholders to be held on May 2, 2024 (the “Annual Meeting”). We first released these proxy materials to our shareholders on March 21, 2024. Links to the Corporation’s website included in this Proxy Statement are provided for convenience only and the information contained there is not incorporated herein by reference unless otherwise explicitly stated.

 

Internet Availability of Proxy Materials

 

This Proxy Statement provides information regarding the matters to be voted on at the Annual Meeting, as well as other information that may be useful to you. In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each shareholder of record, we are furnishing proxy materials to our shareholders on the internet.

 

If you received a Notice of Internet Availability of Proxy Materials (“Notice”) by mail, you will not receive a printed copy of the proxy materials. Instead, the Notice will instruct you as to how you may access and review all the important information contained in the proxy materials. The Notice also instructs you as to how you may submit your proxy over the internet. If you received a Notice by mail and would like to receive a printed copy of the proxy materials, you should follow the instructions for requesting such materials included in the Notice.

 

Summary

 

This Summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information that you should consider. Please read the entire Proxy Statement carefully before voting.

 

When, Where and Who?

 

     
TIME AND DATE  PLACE  RECORD DATE  VOTING
10:00 a.m., Eastern Time
Thursday, May 2, 2024		  Online at
www.virtualshareholdermeeting.
com/CNX2024		  March 5, 2024  Shareholders of CNX as of the record date are entitled to vote. Each share of CNX common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted upon at the Annual Meeting.

 

Proposals and Board Recommendations

 

Your vote is very important to us and to our business. Please cast your vote immediately on all the proposals to ensure that your shares are represented.

 

Item       Proposal     Board
Recommendation
1  Election of Seven Director Nominees  FOR each Director
2  Ratification of the Anticipated Appointment of Ernst & Young LLP (“EY”) as CNX’s Independent Auditor for the Fiscal Year Ending December 31, 2024  FOR
3  Advisory Approval of CNX’s 2023 Named Executive Officer Compensation  FOR

 

  2024 PROXY STATEMENT │ 6
 

Director Nominees

 

The following table and accompanying graphs provide summary information about our directors as of March 5, 2024. Each director of CNX is elected annually by a majority of votes cast.

 

        Director           Current
Committee
Memberships
Name   Age   Since   Occupation   Independent      AC     CC     ESCR     NCG
Robert O. Agbede   68   2022   Chairman and Chief Executive Officer of Chester Group Inc. and Chairman and Chief Executive Officer of Chester LNG, LLC     •   •   •   •
J. Palmer Clarkson   67   2017   Chairman of The Lake Doctors, Inc. and Former President and Chief Executive Officer of Bridgestone HosePower, LLC         •     •
Nicholas J. DeIuliis   55   2014   President and Chief Executive Officer of CNX             •    
Maureen E. Lally-Green   74   2013   Professor of Law Emerita (adjunct) and Former Dean of Kline School of Law of Duquesne University; Former Judge—Superior Court of Pennsylvania         •   •  
Bernard Lanigan, Jr.   76   2016   Chairman and Chief Executive Officer of Southeast Asset Advisors, Inc. Chairman of Lanigan & Associates, P.C.           •   •
Ian McGuire   45   2019   Founder, Investment Partner of Tempus Partners     •     •    
William N. Thorndike, Jr., Chairman   60   2014   Managing Partner of The Cromwell Harbor Partnership     •   •   •    
Committee Chair ESCR Environmental, Safety and Corporate Responsibility Committee (“ESCR”)
AC Audit Committee NCG Nominating and Corporate Governance Committee (“NCG”)
CC Compensation Committee  

 

 

 

(1) Director tenure was calculated based on the month and year of a director commencing service and through March 5, 2024.

 

  2024 PROXY STATEMENT │ 7
 

Who We Are and What We Stand For

 

As outlined below, at CNX, our mission is to empower our team to embrace and drive innovative change that creates long-term value for our investors, enhances our communities and delivers energy solutions for today and tomorrow. This Mission Statement informs our business strategy and drives our decision-making processes every day.

 

 

Our values (outlined below) serve as the compass for our business model and guide every aspect of our business as we strive to achieve our corporate mission:

 

• Responsibility: Be a safe and compliant operator; be a trusted community partner and respected corporate citizen; act with pride and integrity.
• Ownership: Be accountable for our actions and learn from our outcomes, both positive and negative; be calculated risk-takers and seek creative ways to solve problems; be prudent capital allocators.
• Excellence: Be a lean, efficient, nimble organization; be a disciplined, reliable, performance-driven company; be an inclusive team treating each other with fairness and respect.

 

As echoed in our Mission Statement, what we do is important and matters tremendously. We believe the energy CNX develops aids in driving technological advancements that fuel economic growth and helps improve the quality of life in our communities and beyond.

 

To achieve its Mission, CNX’s strategy is to foster a sustainable business model that applies the nonreplicable advantages of low cost, low capital intensity, and operational flexibility to generate regular and substantial free cash flow (“FCF”). We then prioritize injecting that FCF back into our business through (1) investments in human capital, (2) optimization of our asset base, (3) investments in our region, (4) debt reduction, and (5) return of capital to our shareholders. We then measure success through the lens of generating and growing FCF per share to create an attractive long-term investment opportunity for our shareholders.

 

A little more than a year ago, we cast the vision that Appalachia can be the launchpad to a more efficient and sustainable future catalyzed by lower carbon intensity natural gas. We believe our lower emissions natural gas and its derivative products, generated through innovation and new technologies, are the catalyst to a more sustainable and secure future that lasts for generations – particularly as it relates to maximizing these benefits locally. This vision also amplifies the values CNX has lived since our beginning 160 years ago: putting the people of Appalachia first by prioritizing investments and utilizing home-grown resources that truly make a Tangible, Impactful, Local difference in our regional communities first, and then far beyond. Since the vision was cast, others around the local region and beyond have embraced the Appalachia First vision and are working to harness the talent, resources, and opportunities of Appalachia to transform our region, nation, and the world – all while lowering emissions and providing more low-cost energy. There is much more work to do in the months and years ahead; however, from our historic, first-of-its-kind operational data transparency collaboration with Pennsylvania Governor Josh Shapiro, to our involvement with the Appalachian Regional Clean Hydrogen Hub (“ARCH2”), to hyperlocal investments in our communities and local workforce through the CNX Foundation and Mentorship Academy, we have made great strides bringing this strategic vision for the Appalachian region to fruition.

 

  2024 PROXY STATEMENT │ 8
 

Business/Strategic Highlights

 

In 2023, despite commodity market challenges, CNX continued to successfully execute on its long-term strategy of disciplined capital allocation and diligent execution of its Sustainable Business Model to generate long-term value for shareholders. Highlights from 2023 include:

 

• Sixteen Consecutive Quarters of Positive FCF. CNX generated $815 million of net cash provided by operating activities and $305 million in FCF for 2023, resulting in sixteen consecutive quarters of positive FCF.(1) Since publishing our 7-year plan in early 2020 and forecasting FCF generation of over $3.0 billion through the end of 2026,(2) CNX has generated $3.8 billion in net cash provided by operating activities and $1.9 billion of FCF,(1) more than halfway to delivering on that plan. 
• Return of Value to Shareholders. In 2023, CNX repurchased 17.7 million shares for $320 million at an average price of $18.10 per share. Since the completion of the CNX Midstream Partners LP (“CNXM”) take-in transaction in 2020, CNX has retired 33 percent of its outstanding shares at prices we believe represent a substantial discount to our intrinsic per share value.
• Balance Sheet Maintenance. CNX also focuses on maintaining a healthy balance sheet. Since the third quarter of 2020 CNX has reduced outstanding total debt by approximately $386 million and outstanding adjusted net debt by approximately $331 million(1) and continues to evaluate the timing of further debt reduction as part of our capital allocation process. With the reductions in net debt, CNX has an extended maturity runway which provides considerable flexibility to take advantage of any capital market disconnects or opportunities that may arise.
• Efficiently Developing Our Core Assets. In 2023, CNX’s capital program resulted in the conversion of 819 Bcfe, representing a 1.46x proved developed replacement ratio, and bringing the total proved developed reserves at year-end 2023 to 6.03 Tcfe after adjusting for asset sales, price, production and revisions. Finding and development costs for this activity, when including midstream and water infrastructure investments, were $0.50 per Mcfe. The ability to efficiently develop and replace our producing reserves year after year, even in low commodity price environments, is core to the creation of long-term per share value.
• CNX New Technologies. In 2023, CNX’s New Technologies group generated $34 million in FCF through the monetization of environmental attributes associated with our waste methane abatement operations in Virginia and Pennsylvania. The New Technologies team is innovating and implementing technological advancements that dovetail with derivative products to take full advantage of the energy catalyst situated in our backyard of Appalachia: natural gas. These efforts have the potential to fuel new industrial and manufacturing businesses while at the same time helping to reduce emissions. Examples of the CNX New Technologies team’s successes in 2023 include:
  - Working to establish pathways for the recognition of waste gas from a coal mine being captured by CNX’s CMM wells, creating incentives for the capture of methane that would otherwise be vented to the atmosphere.
  - Developing a portfolio of intellectual property and technical solutions within the exploration and production value chain that continue to advance operational efficiency, reduce emissions, and drive safety improvements. 
  - Entering into a one-of-a-kind public-private collaboration with Pittsburgh International Airport to expand alternative fuel markets. CNX was also selected as a project developer within the ARCH2 hydrogen hub, one of seven hydrogen hubs selected by the U.S. Department of Energy to advance the clean hydrogen economy.
  - Focusing on collaboration with like-minded companies, organizations, and agencies to advance Carbon Capture Utilization and Sequestration (“CCUS”) and geothermal energy development to expand natural gas use and low-cost energy alternatives in Appalachia.

 

(1) FCF, Net Debt, and Adjusted Net Debt are financial measures not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Reconciliations of non-GAAP measures to the nearest GAAP measures are set forth in Appendix A to this Proxy Statement.
(2) CNX is unable to provide a reconciliation of projected financial results contained in this proxy statement, including the measures referenced above, to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income, net cash provided by operating activities and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.

 

  2024 PROXY STATEMENT │ 9
 

Environmental, Social, and Governance (“ESG”) Highlights

 

In conjunction with CNX’s commitment to its Appalachia First vision, we focus on ESG initiatives that are Tangible, Impactful and Local. Examples of our approach to ESG in 2023 are as follows:

 

Environmental Stewardship

 

CNX seeks to reduce its environmental footprint as well as that of others. In 2023, we achieved this in the following ways:

 

• Radical Transparency. In late 2023, CNX and Pennsylvania Governor Josh Shapiro announced a first-of-its-kind collaboration that provides for real-time monitoring and public disclosure of air quality, chemical additives, water quality and radiation protection. Through this historic commitment, CNX makes it possible for our families, neighbors, and the public at large to understand the facts about natural gas development and its critical role in the environment and the economy, and to provide information for data-informed policy making. We also expect learnings that will enable us to enhance and continually improve our operating practices.
• Focus on Innovation in Operations. In 2023, we enhanced and implemented several new innovative technologies:
  - Electrifying our drilling operation. CNX is in the final stages of electrifying our drilling operation. Natural gas generators fueled by our field gas, coupled with an electric air package will reduce diesel fuel use when drilling, reducing emissions and noise. This package can be applied to both top hole and horizontal rigs and allows ancillary equipment to be added to the power distribution.
  - Expanded real-time operations center capabilities. Our production, midstream, water, and most recently, air quality systems, are monitored by trained personnel with a direct line to field operations for rapid deployment to the precise asset and area at risk.
  - Fully implemented H2Ops. H2Ops is proprietary source code to CNX and transforms the way we capture and use water hauling data, helping to decrease emissions by highlighting truck waiting times, allowing for better fleet management and reducing hauls and truck idle times within operations.
• Reducing Methane Emissions. In 2023, CNX lowered its methane intensity and also reduced methane as CO2e emissions by approximately 44,000 tons. This builds on the previous 94% reduction in Scope 1 and 2 CO2e emissions achieved since 2011. CNX’s average annual GHG abatement through methane capture far exceeds our combined Scope 1 and 2 CO2e emissions, and we continue to invest in improvements designed to further reduce emissions. In 2023, we allocated $7 million of capital investment to methane reduction efforts, which included changes to our pneumatic devices and our liquids unloading procedures. We have allocated an additional $5 million of 2024 capital to similar methane reduction efforts, which we expect to result in an annualized methane reduction of 89,000 tons CO2e by the end of 2024. These planned future efforts coupled with CNX’s methane intensity reduction of 52% in our production and 31% in our gathering and boosting segment between 2020 and year-end 2023 will help us reach our future goal of methane intensity levels below 0.020% by 2024 for both segments, which would represent a reduction since 2020 of approximately 71% and 43% respectively.
• Appalachian Methane Initiative. CNX joined the Appalachian Methane Initiative (“AMI”) in 2023, which is a proactive, first-of-its kind consortium of leading U.S. natural gas companies designed to further enhance methane emissions monitoring and, ultimately, facilitate methane emissions reductions in the Appalachian Basin. AMI uses data collected from aerial monitoring surveys alongside advanced methane monitoring and reporting frameworks. CNX’s participation in AMI will supplement the multiple other early methane emissions detection devices that we utilize, such as drone technology, OGI camera surveys, and passive continuous monitoring detection systems.
• Executive Pay Tied to Methane Emissions Reductions. In 2023, CNX continued the practice of tying 10% of long-term executive compensation to methane emissions reduction targets based on One Future Coalition standards. This objective performance metric further demonstrates our commitment to tangible methane emissions reduction. For the third straight year, CNX outperformed the established targets.

 

  2024 PROXY STATEMENT │ 10
 

Social Responsibility

 

CNX is focused on enabling underserved communities in Appalachia to achieve prosperity. Below are Tangible, Impactful, Local ways CNX took action in 2023:

 

• CNX Foundation. In 2023, the CNX Foundation contributed $3.25 million through 121 initiatives aligned with its Tangible, Impactful, Local focus on community support. These efforts are part of CNX’s pledge to invest in local initiatives supporting underserved communities within our operating footprint. Examples for 2023 include:
  - $1,000,000 committed to Penn Highlands Mon Valley for an inpatient substance recovery unit;
  - $150,000 to support UPMC M.O.V.E.S., a collaboration to identify career opportunities for Mentorship Academy students in the healthcare sector;
  - $155,000 to Food Helpers, providing programs that distribute supplemental food, nutritional information and education to food insecure residents in Washington County;
  - $50,000 for a 3-year sponsorship of the Pony League World Series;
  - $101,000 donated to first responders throughout Appalachia;
  - $42,000 raised to pay school lunch debts for students at seven school districts across Appalachia;
  - $50,000 to Stop the Violence Pittsburgh;
  - $40,000 to Outreached Arms, providing meals to the housing insecure in Pittsburgh;
  - $50,000 to Computer Reach, a job re-entry and digital literacy program;
  - $24,000 to Tree Pittsburgh, supporting the distribution of 400 trees across the Mon Valley, offsetting canopy loss; and
  - $30,000 to Heroes Support Heroes for their Operation Santa event for all active duty and veteran families.
• CNX Mentorship Academy Growth. In 2023, the CNX Foundation’s Mentorship Academy continued to deliver on CNX’s Appalachia First vision by connecting our region’s young adults to family sustaining careers in Appalachia. Now in its third year, Mentorship Academy student participation increased by 35% (85 students enrolled) and includes students representing 21 schools across five counties in southwest Pennsylvania. Mentor engagement grew 60% in 2023, and graduate full-time workforce placement increased 78%. Looking toward its fourth cohort in 2024, CNX Foundation’s commitment to supporting the region’s youth by connecting them to opportunities throughout Appalachia will further drive our ability to generate Tangible, Impactful, Local outcomes that bolster the region.
• CNX IMPACT Initiative. CNX continued the Impact initiative in 2023, which over the course of the final two months of 2023 resulted in the following direct contributions from CNX employees:
  - Over 300 employees supporting organizations across Appalachia through volunteerism;
  - Packing of over 115 boxes containing Thanksgiving meals for military families;
  - Food drives resulting in almost 2,400 food items donated to food banks across Appalachia;
  - Sponsorship of over 100 children during the Christmas season and donation of almost 750 toys through various community organizations;
  - Packing 56 bags to support foster children transitioning into new homes through the Foster Love Project; and
  - Packing 10,000 bags of healthy snacks to support Food Helpers Little Moochi program. 
• Words in Action. CNX’s Board approved a $1.5 million reduction in our CEO’s annual compensation for 2024, following similar reductions of $1.5 million and $1 million in 2023 and 2022, respectively. The Board then determined to support expansion of the following efforts of the CNX Foundation:
  - Extending elements of the successful Mentorship Academy concept in collaboration with Community College of Allegheny County to remove barriers and create career pathways for local trade members, veterans, survivors of domestic violence and opioid addiction, and the formerly incarcerated by providing the knowledge and skills needed to access and thrive in the region’s evolving energy economy;
  - Supporting community investments specifically targeted at our Westmoreland County, Pennsylvania operational footprint through engagement with communities; and
  - Growing our relationship with Outreached Arms, Washington County’s LeMoyne Center, and other existing community-based partnerships that are making a Tangible, Impactful, Local impact.

 

  2024 PROXY STATEMENT │ 11
 
• The HQ at CNX. The HQ at CNX provides world-class workspace at our headquarters to small businesses, including minority- and women-owned businesses; educational institutions; and non-profit organizations emphasizing support for the same Tangible, Impactful, Local causes in which the CNX Foundation invests. With the addition of 18 new tenants beginning in 2023, the HQ at CNX is at 82% capacity, providing workspace to 26 total tenants. Current HQ at CNX tenants include:
  - 412 Thrive (non-profit organization);
  - Autism Caring Center (non-profit organization);
  - Big Brothers Big Sisters of Greater Pittsburgh (non-profit organization);
  - Chandler Coaching & Consulting, LLC (minority-owned business);
  - Community College of Allegheny County (educational institution);
  - Compassionate Care Unlimited, Inc. (women and service-disabled-veteran owned);
  - Domestic Violence Services of Southwestern PA (non-profit organization);
  - Down Syndrome Association of Pittsburgh (non-profit organization);
  - Dress for Success Pittsburgh (non-profit organization);
  - Face2Face Healing (non-profit organization);
  - Food Helpers (non-profit organization);
  - Jeff Hancher Enterprises (veteran-owned business);
  - Joco Holdings, LLC (minority-owned business);
  - The Language and Behavior Center (non-profit organization);
  - Leadership Washington County (non-profit organization);
  - M&A Resources (minority-owned business);
  - Maria Allshouse, LLC (women-owned business);
  - Nonprofit SideKick (women-owned business);
  - Oakbridge Advisors Group (women-owned business);
  - Perked Up Café (women-owned business);
  - Technical Analysis & Services International, Inc. (TASI) (minority-owned business);
  - Transitional Paths to Independent Living (non-profit organization);
  - True Fit Marketing (women-owned business);
  - Washington County Chamber of Commerce (non-profit organization);
  - Waynesburg University (educational institution); and
  - Women’s Energy Network, Greater Pittsburgh (non-profit organization).

 

Corporate Governance

 

We view strong corporate governance and promoting a culture of compliance as the foundation of our approach to corporate responsibility.

 

• Addition Bolsters Unique Governance Perspective. In December 2023, CNX appointed Timothy S. Bedard as Executive Vice President, General Counsel, and Corporate Secretary. Mr. Bedard brings to CNX extensive expertise in intellectual property and technology, as well as significant experience partnering with management teams. In addition, Mr. Bedard formerly served as an officer in the U.S. Navy. His unique perspectives will help us accelerate the growth of our New Technologies business opportunities and continue to execute on our Sustainable Business Model.
• Continuous Board Education. In addition to regularly scheduled business meetings, our directors gather periodically to focus specifically on Board education. These meetings enhance our directors’ knowledge about CNX’s business and promote strong corporate governance. Recent sessions spotlighted CNX’s cybersecurity program, community relations, hydrogen technologies, and the CNX Political Action Committee and lobbying activities.
• Enhanced Governance Focus at All Levels.
  - CNX’s Regulatory Reporting Group (“RRG”) facilitates accurate, complete, and timely reporting regarding CNX’s regulatory requirements across its various operations: both upstream and midstream. The RRG enhances information sharing that provides all CNX employees with centralized access to up-to-date, critical regulatory data.
  - CNX’s Emission Reduction Task Force (“ERTF”), consisting of members from various operational, environmental, engineering, and data management teams, focuses on reducing CNX’s methane emissions. The ERTF meets regularly to prioritize opportunities with the greatest potential to impact and reduce CNX’s overall emissions footprint.
• Ownership Stake Promotes Strong Governance. As of the record date, our directors and named executive officers owned 4.65% of the outstanding shares of CNX. This is an increase from 3.72% a year ago. CNX’s current directors and named executive officers have not disposed of shares of CNX stock (excluding in connection with tax withholding) since assuming their current roles, which extends back as far as 2011. This visible commitment demonstrates the confidence that our leadership team has in CNX’s Sustainable Business Model, the foundation of which is strong corporate governance.

 

  2024 PROXY STATEMENT │ 12
 

Compensation Highlights

 

CNX’s compensation philosophy is to provide a total compensation package that will attract and retain employees. This starts with a competitive base salary and traditional benefits package (such as 401(k), health insurance, vacation time, etc.). All full-time employees are also included in our Short-Term Incentive Compensation (“STIC”) program, which awards an annual bonus, contingent on a blend of corporate financial performance (i.e., adjusted FCF per share) and individual contributions. Certain key employees and managers also participate in our Long-Term Incentive Compensation (“LTIC”) program, which awards restricted stock units (“RSUs”) to employees that generally vest over a three-year period. Senior management and other key personnel may also receive performance share units (“PSUs”), including ESG PSUs specifically tied to achieving methane intensity reduction targets, which are designed to promote retention and further align overall compensation with CNX’s long-term objective of creating shareholder value.

 

COMPENSATION STRUCTURE

 

 

Highlights from our 2023 compensation program include:

 

• Continued Focus on Performance-Based Compensation.
  - We continued the practice of designating 40% of our LTIC program as PSUs that will vest, if earned, based on Total Shareholder Return and Absolute Stock Price performance metrics.
  - We again designed our LTIC program to include 10% ESG PSUs that will vest, if earned, if CNX meets methane emission intensity reduction targets. If we fail to meet those targets, our executives will forfeit 10% of their LTIC award for that year. This objective measure demonstrates our commitment to linking compensation to performance and reinforces our specific focus on ESG performance. 
  - In August 2023, our Compensation Committee approved the grant of Special PSUs to certain executives. This Special PSU award, with a seven-year performance period, was structured to drive the realization of per-share value through an incentive structure focused solely on long-term share price performance.
• CEO Investment Embodies Tangible, Impactful and Local. In 2023, our Board and CEO agreed to reduce the CEO’s LTIC grant by $1.5 million and redirected those funds to the CNX Foundation, including contributions to expand programming for CNX Mentorship Academy students and create career opportunities for such students through the UPMC Orthopedics and Hillman Cancer Center.
• Strong Shareholder Support. Approximately 96% of the shares voted at our 2023 Annual Meeting of Shareholders approved of our 2022 executive compensation program. We appreciate this support and consider this vote a strong endorsement of our executive compensation program.
• CEO Pay Bucking Trends. In times when CEO pay is increasing, CNX’s CEO pay is trending in the opposite direction. In addition to the Board approving a reduction in the aggregate amount of $4.0 million of the CEO’s LTIC compensation over the last three years, at the encouragement of our CEO, the Board has not increased his regular annual base salary since 2015. This, coupled with a steady increase in CNX’s median employee compensation (as noted below), led to our CEO Pay Ratio decreasing for the fourth consecutive year going from 72:1 in 2020 to 37:1 in 2023. This trend is directly attributable to our Board and CEO’s commitment to reinvesting in our business, our employees and our local communities.
• Median Employee Compensation on the Rise. For the fourth straight year, CNX’s median employee compensation rose. Compared to our 2020 proxy disclosure, our 2023 median employee compensation increased $23,418 to $175,782, or approximately 15%. CNX prides itself on providing compensation packages designed to attract and retain talent and motivate its employees.

 

  2024 PROXY STATEMENT │ 13
 

Board of Directors Information

 

Board of Directors and its Committees

 

How We Think About Board Composition: Cohesive and Right-Sized

 

Our commitment to disciplined capital allocation and generating long-term intrinsic per share value requires close alignment and careful consideration of our business objectives. This is why CNX believes in having a tight-knit Board with each of its members contributing their own unique perspectives to help CNX achieve its mission.

 

The importance we place on having the right mix of Board members cannot be understated. We consider our Board size a competitive advantage because it promotes a healthy discourse that, in larger groups, can become bureaucratic and fragmented. We also believe that diversity of perspective leads to diversity of thought, a concept evident in our Board architecture. Finally, we expect a substantial time commitment from each of our directors to engage in an impactful discussion about our business.

 

Our Board regularly discusses succession planning and actively considers what skills and perspectives, including diversity mix, it would benefit from most. The Board intends to continue such discussions over time in a manner designed to both preserve the character of our Board and support CNX’s business needs.

 

Periodic Board Evolution

 

The Board seeks to maintain an effective, well-rounded, diverse, and financially literate Board.

 

BOARD PROCESS FOR IDENTIFICATION AND REVIEW OF DIRECTOR CANDIDATES TO JOIN OUR BOARD

 

 

Board Leadership Structure

 

Pursuant to the Corporation’s Corporate Governance Guidelines, upon the recommendation of the NCG Committee, the Board will annually elect a chairperson from among the directors. The chairperson is principally responsible for communicating with the Board members and presides at all meetings of the Board. The chairperson also has such powers and performs such other duties as from time to time may be assigned to him or her by the Board, including:

 

• Providing leadership to the Board;
• Approving the schedule and agenda for the applicable Board meeting(s) as well as information to be sent to the Board, determining whether there are major risks which the Board should focus on at the meeting(s), and facilitating communication among the directors;
• Authority to direct the CEO (if a different person from the chairperson) or Corporate Secretary to call a special meeting of the Board or of the independent members of the Board;
• Providing advice and guidance to the CEO, as requested by the CEO;
• Providing strategy insight and guidance to the Corporation; and
• Authority to consult directly with major shareholders, including assisting with investor relations activities of the Corporation, when requested and appropriate to do so.

 

The Corporation’s current Board leadership structure provides for the annual appointment of a non-employee chairperson of the Board. Mr. Thorndike, an independent director, has served as our Chairman of the Board since 2016. The Board believes that an independent chairperson creates accountability and enhances the communication of a clear and consistent message to our shareholders and others.

 

  2024 PROXY STATEMENT │ 14
 

In the event that the director serving as chairperson of the Board is not independent, the Board will, upon the recommendation of the NCG Committee, designate one of its independent members who has served as a director of the Corporation for at least one year to serve as Lead Independent Director of the Board, with the following specific duties and responsibilities:

 

• To act as a liaison between the chairperson and the independent directors;
• To preside at all meetings of the Board at which the chairperson is not present, including executive sessions of the independent directors;
• To review and approve with the chairperson the schedule of meetings, meeting agendas and type of information to be provided for each of the applicable Board meetings and review with the chairperson whether there are risks which the Board should focus upon at such meetings;
• Authority to direct the CEO or Corporate Secretary to call a special meeting of the independent directors;
• Authority to consult directly with major shareholders, when requested and appropriate to do so; and
• To perform such other duties as may from time to time be delegated to the lead independent director by the Board.

 

All CNX Board members (except the CEO) are independent. In addition, our Audit Committee, Compensation Committee and NCG Committee are composed entirely of independent directors. We believe that this composition enhances our commitment to independent risk oversight.

 

Board Diversity Philosophy

 

Pursuant to its charter, the NCG Committee, in reviewing individuals for Board membership, will include among the attributes it considers an individual’s diversity of background, including gender, race, and ethnicity. This policy is consistent with CNX’s long-standing goal to have a Board with diverse personal and professional backgrounds, experience, and perspectives that, when combined, provide a varied portfolio of experience and knowledge that will well serve CNX’s governance and strategic needs. The NCG Committee assesses the effectiveness of this policy in promoting a diverse Board as part of its regular review of CNX’s governance practices, through the annual Board and committee evaluation processes, and by monitoring changes in the Board’s composition and diversity mix along a variety of dimensions over time.

 

Board Diversity Matrix

 

Below is a matrix demonstrating the current composition of our Board, 29% of which consists of directors self-identifying as diverse in either gender or race/ethnicity. CNX maintains a small, tight-knit Board that fosters nimble decision-making, and we strive to preserve that dynamic while evaluating ways to promote diversity and inclusivity on our Board.

 

Board Diversity Matrix (As of March 5, 2024)

 

Total Number of Directors (7)                
    Female         Male         Non-Binary         Did Not
Disclose Gender
Part I: Gender Identity                
Directors   1   6   —   —
                 
Part II: Demographic Background                
African American or Black   —   1   —   —
Alaskan Native or Native American   —   —   —   —
Asian   —   —   —   —
Hispanic or Latinx   —   —   —   —
Native Hawaiian or Pacific Islander   —   —   —   —
White   1   5   —   —
Two or More Races or Ethnicities   —   —   —   —
Did Not Disclose Demographic Background   —   —   —   —

 

  2024 PROXY STATEMENT │ 15
 

Board Skills Matrix

 

Our Board strives to include directors with a varied background and skill set. Below is a summary table encapsulating certain key skills our directors possess and a brief description of the importance of each:

 

  Senior Officer/
Leadership		 Finance/
Accounting		 Industry/
Technical		 Business
Strategy		 Legal Risk
Management
Robert O. Agbede •   • •   •
J. Palmer Clarkson • • • •   •
Nicholas J. DeIuliis • • • • • •
Maureen E. Lally-Green •       • •
Bernard Lanigan, Jr. • •   •   •
Ian McGuire • •   •   •
William N. Thorndike, Jr. • •   •   •

 

Note: The lack of a mark in a specific category is not indicative of a director nominee lacking that particular skill. We rely on the unique knowledge and experience of all our directors in each of these categories (and others). The above table is merely meant to illustrate areas in which certain directors, through their experience, are particularly qualified to provide guidance to CNX.

 

Senior Officer/Leadership Experience: CNX values directors with senior leadership experience that can provide valuable insights about, and practical solutions to, common issues facing the Corporation and the natural gas industry at large.

 

Finance/Accounting Expertise: Directors with backgrounds in financial services and accounting bring tremendous value to our Board when advising on strategic capital allocation decisions and in analyzing public company reporting requirements.

 

Industry/Technical Expertise: We believe that technical expertise, including those directors with a background in engineering, and in particular experience in the natural gas industry, is particularly beneficial to our Board as it considers operational performance and other issues specific to our business.

 

Business Strategy Expertise: Many of our directors possess decades of experience successfully guiding businesses through strategic decision-making processes. CNX leverages this breadth of experience to assist in developing strategies to help it achieve its long-term goal of creating shareholder value while simultaneously enhancing our communities and delivering energy solutions for today and tomorrow.

 

Legal Expertise: We value directors with legal skills and a history of promoting compliance with all aspects of internal policies and external regulations and laws applicable to our business.

 

Risk Management Expertise: Identifying, assessing, and mitigating risk is a core principle of any successful business. This is why CNX seeks out directors with a deep understanding of the existing risks that our business faces and the ability to quickly identify and address new risks that may arise.

 

  2024 PROXY STATEMENT │ 16
 

Communication with the Board of Directors

 

Shareholders and other interested persons who wish to communicate with the Board as a whole, any committee of the Board, individual directors, our independent directors as a group, or the Chairperson of the Board may do so by writing to the Board at Corporate Secretary, CNX Resources Corporation, CNX Center, 1000 Horizon Vue Drive, Suite 400, Canonsburg, PA 15317, or by sending an e-mail to [email protected]. The Corporate Secretary will relay all such communications to the Board as a whole, to individual directors, or to the Chairperson of the Board (as appropriate) at the next regularly scheduled Board meeting (or earlier as necessary) except for spam, junk mail, mass mailings, solicitations, resumes, job inquiries or other matters unrelated to the Corporation. Communications that are intended specifically for the Chairperson of the Board or a particular director should be sent to the street address or e-mail address noted above, to the attention of the Chairperson of the Board or the particular director, as intended. Information concerning how to communicate with the Board is also included on CNX’s website at www.cnx.com.

 

Director Resignation Policy

 

Our Amended and Restated Bylaws (“Bylaws”) provide that if an incumbent director is not elected at a meeting for the election of directors and no successor has been elected at such meeting, the director is expected to promptly tender his or her resignation to the Board. The NCG Committee will make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the NCG Committee’s recommendation, and publicly disclose its decision and the underlying rationale in a press release, a filing with the SEC or other broadly disseminated means of communication within 90 days from the date of the certification of the election results.

 

Corporate Governance Web Page and Available Documents

 

We maintain a corporate governance page on our website at www.cnx.com. The following documents are currently included on our website (under the “Corporate Governance” tab of the “About Us” page):

 

• Amended and Restated Bylaws;
• Corporate Governance Guidelines;
• Code of Director Business Conduct and Ethics;
• Code of Employee Business Conduct and Ethics, which covers all employees of CNX, including executives;
• Charters of the Audit, NCG, Compensation, and ESCR Committees;
• Compliance Reporting Policy;
• Health, Safety and Environmental Policy;
• Human Rights Statement;
• Internal Auditing Charter;
• Related Party Policy and Procedures; and
• Supplier Code of Conduct.

 

We also will provide a printed copy of these documents, free of charge and upon request, to shareholders who contact the Investor Relations department in writing at CNX Resources Corporation, CNX Center, 1000 Horizon Vue Drive, Suite 400, Canonsburg, Pennsylvania 15317. These documents address important principles and corporate governance processes.

 

  2024 PROXY STATEMENT │ 17
 

Risk Management

 

  THE BOARD  
 

•

Oversees our risk management policies and practices, assesses major risks facing CNX, and reviews options for risk mitigation.

•

Monitors risks that have been delegated to a particular committee through reports provided by the respective committee chairpersons at each regularly-scheduled Board meeting.

•

Meets regularly with management to evaluate risks and develop corresponding mitigation strategies to facilitate a culture of compliance at CNX.

 

 

Audit Committee

•

Discusses policies and guidelines regarding risk assessment/management, including the risk of fraud.

•

Reviews and assesses the quality and integrity of CNX’s public reporting, compliance with legal and regulatory requirements, the performance and independence of CNX’s independent auditors, the performance of the internal audit department, the effectiveness of CNX’s disclosure controls and procedures, and the adequacy and effectiveness of our risk management programs.

•

Reviews and assesses CNX’s major financial, legal and similar risk exposures and the steps that management has taken to monitor and control such exposures.

   

ESCR Committee

•

Reviews with management the quality of CNX’s procedures for identifying, assessing, monitoring and managing the principal risks in the Corporation’s business associated with protection of the environment, safety, corporate responsibility and security matters (including cybersecurity) and report the ESCR Committee’s findings to the Board.

•

Reviews any significant environmental, safety, corporate responsibility, public policy, legislative, political and social issues and trends that may materially affect the business operations, financial performance, or public image of the Corporation or the industry, and management’s response to such matters.

•

Oversees management’s monitoring and enforcement of CNX’s policies to protect the health and safety of employees, contractors, customers, the public, and the environment.

•

Reviews (i) any material compliance issues with health, safety and environmental laws, (ii) any material pending or threatened administrative, regulatory or judicial proceedings regarding health, safety or environmental matters, and (iii) management’s response to the foregoing matters.

   

NCG Committee

•

Reviews and advises the Board regarding material corporate governance-related risks.

•

Addresses risks associated with our management structure by reviewing, among other matters, the qualifications, experience, diversity and backgrounds of our directors on an annual basis to confirm that our Board is composed of individuals who are capable of providing appropriate oversight to management.

  

Compensation Committee

•

Develops compensation plans designed to align with shareholder interests and reflect investor feedback.

•

Reviews and oversees the risk assessment related to CNX’s compensation programs and reports the results to the Board.

•

Oversees management development plans and activities, including succession planning.

 

  MANAGEMENT  
 

•

Identifies, communicates and discusses the risks affecting CNX, its subsidiaries, and our business through regular presentations to the Board and appropriate committees (as determined by the subject of the particular risk), including reviewing financial and ESG-related matters.

•

In 2023, in connection with each meeting of the Board, the CEO performed a risk analysis of the material risks that could affect CNX and communicated those results to the Board.

•

CNX’s Chief Risk Officer is responsible for the management and governance necessary to identify, evaluate, mitigate, and manage CNX’s strategic, operational, compliance, and reputational risks.

 

 

  2024 PROXY STATEMENT │ 18
 

Committees of the Board of Directors

 

Our Board has four standing committees: Audit, Compensation, NCG, and ESCR. Actions taken by our committees are reported to the full Board. Each of our standing committees has a written charter, which is accessible on our website (www.cnx.com) under the “Corporate Governance” tab of the “About Us” page. In January 2024, the Board determined that all members of each of the Audit, Compensation, and NCG Committees were independent under the current listing standards of the New York Stock Exchange (the “NYSE”) and other applicable regulatory requirements. See “Determination of Director Independence” for additional information regarding the Board’s independence determinations with respect to its members.

 

Audit Committee

 

RESPONSIBILITIES FOUR INDEPENDENT BOARD MEMBERS

•

Assist our Board in its oversight of the integrity of our financial statements, CNX’s compliance with its legal and regulatory requirements, the independent auditor’s qualifications, independence and performance, and the performance of CNX’s internal audit function;

•

Review significant accounting principle and financial statement presentation issues, including significant changes in accounting principles and issues with the adequacy of the Corporation’s internal controls; and

•

Prepare the Audit Committee Report.

 

Our Board has determined that all members of the Audit Committee are financially literate. Our Board has also determined that each of Messrs. Lanigan, McGuire, and Thorndike qualifies as an “audit committee financial expert” under applicable SEC Rules and is independent under the current listing standards of the NYSE, SEC rules, and other applicable regulatory requirements. A copy of the Audit Committee Report for the 2023 fiscal year is included in this Proxy Statement.

 

Compensation Committee

 

RESPONSIBILITIES FIVE INDEPENDENT BOARD MEMBERS

•

Establish and oversee compensation plans and programs for non-employee directors and executive officers;

•

Review the performance of executive officers and award or recommend incentive compensation, as appropriate, based upon performance;

•

Review and monitor our management development and succession plans and activities;

•

Appoint and oversee any outside compensation consultants; and

•

Prepare the Compensation Committee Report.

 

Our Compensation Committee’s charter generally permits it to delegate its authority, duties and responsibilities or functions to one or more members of the Compensation Committee or to the Corporation’s officers when appropriate, consistent with applicable laws, regulations, and listing standards. The terms of our Executive Annual Incentive Plan and CNX Resources Corporation Amended and Restated Equity and Incentive Compensation Plan (the “Equity and Incentive Compensation Plan”) also permit our Compensation Committee to delegate certain of its powers and authority under such plans to our officers. In accordance with applicable law, the Compensation Committee authorized our CEO to grant during 2023 an aggregate of up to 1,000,000 shares of our common stock (in the form of equity incentive awards) and annual cash incentive awards to our non-executive employees in compliance with the terms and conditions of such delegation, the plans and applicable laws and regulations.

 

Our Compensation Committee periodically reviews the compensation paid to our non-employee directors and the principles upon which their compensation is determined. The Compensation Committee also periodically reports to the Board on how our non-employee director compensation practices compare with those of other similarly situated public corporations and, if the Compensation Committee deems it appropriate, recommends changes to our director compensation practices to our Board for approval.

 

For additional information regarding the Compensation Committee’s processes and procedures for reviewing and determining executive officer compensation, see “Compensation Discussion and Analysis”.

 

  2024 PROXY STATEMENT │ 19
 

NCG Committee

 

RESPONSIBILITIES FOUR INDEPENDENT BOARD MEMBERS

•

Identify individuals qualified to serve as members of the Board;

•

Provide recommendations to the Board as to (i) its structure and operations and (ii) CNX’s corporate governance principles;

•

Annually review and recommend to the Board the appropriate size, function, and needs of the Board;

•

Recommend to the Board the responsibilities of the Board committees, including each committee’s structure, operations, and delegation authority;

•

Oversee the annual evaluation of the Board and the other Board committees and management, and report to the Board the results of such evaluations;

•

Annually recommend to the Board the slate of director nominees to be elected by shareholders at the annual meeting, taking into consideration nominees submitted by shareholders, and, where applicable, to fill Board vacancies; and

•

Annually review and assess CNX’s Corporate Governance Guidelines and recommend any changes to the Board.

 

The NCG Committee will consider director candidates recommended by shareholders. Shareholders wishing to submit candidates for election as directors should submit the names of such candidates to the Corporate Secretary, CNX Resources Corporation, CNX Center, 1000 Horizon Vue Drive, Suite 400, Canonsburg, PA 15317. See “Additional Matters” for more information on submitting director nominations. Director nominees are selected based upon contributions that they can make to CNX. Director nominees must have experience in positions with a high degree of responsibility and leadership experience. In addition, in assessing the Board’s membership needs, the NCG Committee generally seeks to maintain a Board that consists of individuals who demonstrate judgment and ability to assess Corporation strategy, business plans, management evaluation, and other key issues, and who are competent in the following areas: general industry knowledge; accounting and finance; ability to make sound business decisions; management; leadership; knowledge of international markets; business strategy; crisis management; corporate governance; and risk management.

 

The NCG Committee’s process for identifying and evaluating director nominees is as follows:

 

(i) determine what types of backgrounds, skills, and attributes are needed to help strengthen and balance the Board, taking into account the competencies described above, as well as diversity of background and experience;
(ii) at appropriate times, actively seek individuals qualified to become new members of the Board, including through the review of candidates submitted by our independent directors, executive officers and shareholders, or by third-party search firms that have not been retained or solicited by CNX for these services;
(iii) evaluate potential nominees by considering the competencies described above and our Board skills matrix, and conducting interviews (the evaluation process is the same for all candidates, including candidates recommended by shareholders); and
(iv) recommend to the Board the slate of director nominees to be elected by the shareholders at CNX’s next annual meeting of shareholders.

 

  2024 PROXY STATEMENT │ 20
 

ESCR Committee

 

RESPONSIBILITIES SEVEN (SIX INDEPENDENT) BOARD MEMBERS

•

Oversee policies and management systems for environmental, safety, corporate responsibility and security matters (including cybersecurity);

•

Review CNX’s strategy, including objectives and policies, relative to the protection of the environment, safety of employees, contractors, customers and the public, as well as issues of corporate responsibility and security (including cybersecurity);

•

Review any material compliance issues with health, safety and environmental laws, any material pending or threatened administrative, regulatory, or judicial proceedings regarding health, safety or environmental matters, and management’s response to the foregoing legal matters; and

•

Review any significant environmental, safety, corporate responsibility public policy, legislative, political and social issues and trends that may materially affect the business operations, financial performance or public image of CNX or its industry, and management’s response to such matters.

 

The ESCR Committee is responsible for advising CNX on all issues relating to environmental, safety, corporate responsibility and security (including cybersecurity). It is the only committee of the Board that includes all of CNX’s directors. Additional details about CNX’s ESG efforts are located in the “ESG Highlights” section of this Proxy Statement and on CNX’s website at sustainability.cnx.com.

 

Membership and Meetings of the Board of Directors and its Committees

 

In 2023, each director named below other than Mr. Thorndike attended 100% of the aggregate of: (i) the total number of meetings held by our Board (during the period for which he or she was a director); and (ii) the total number of meetings held by all Board committees on which he or she served (during the period for which he or she served). Due to health-related issues, Mr. Thorndike attended less than 75% of the total meetings of the Board and the committees on which he served in 2023. Mr. Thorndike has served on the Board since 2014, and until 2023 consistently attended no fewer than 85% of the total meetings of the Board and the committees on which he served each year. Further, in 2023, Mr. Thorndike remained in regular contact with the Board and CEO, participating in key matters. 

 

Committee membership as of March 5, 2024, and the number of meetings held during 2023 are shown in the following table:

 

  Board of
Directors		          Audit
Committee		          Compensation
Committee		          NCG
Committee		          ESCR
Committee
Robert O. Agbede Member   Member   Member   Member   Member
J. Palmer Clarkson Member   —   Member   Member   Chair
Nicholas J. DeIuliis Member   —   —   —   Member
Maureen E. Lally-Green Member   —   Member   Chair   Member
Bernard Lanigan, Jr. Member   Chair   —   Member   Member
Ian McGuire Member   Member   Chair   —   Member
William N. Thorndike, Jr. Chairman   Member   Member   —   Member
No. of 2023 Meetings 7   8   4   4   4

 

During 2023, the non-management directors held four executive sessions of the Board. Mr. Thorndike, our Chairman of the Board and an independent director, served as the presiding director at executive sessions he attended. For all other executive sessions, the presiding director position was rotated among the chairs of the Board committees (Messrs. Clarkson, Lanigan and McGuire and Ms. Lally-Green), all of whom are independent directors.

 

  2024 PROXY STATEMENT │ 21
 

Board of Directors and Annual Meeting Attendance

 

The business and affairs of CNX are managed under the direction of our Board. We do not have a policy regarding directors’ attendance at our Annual Meetings of Shareholders; however, all directors are encouraged to attend and typically do. All the members of our Board attended the 2023 Annual Meeting, other than Mr. Thorndike, who was unable to attend due to health-related issues.
An IDX service. Copyright IDX. All rights reserved. Data provided by Edgar Online.