How is the 2010 bonus pool funded?

The bonus pool is funded by a minimum cash amount of $5,000,000, plus 12% of the gross margins generated from both short-term and long-term contracts entered into during the 2010 fiscal year. Gross margins from short-term contracts are credited to the 2010 fiscal year, while long-term contract gross margins are calculated using a present value with a 15% discount rate for year four and beyond.

How will the bonuses be paid out, especially the equity portion?

Bonuses will be paid in cash no later than February 28, 2011. For the long-term contract component, 50% will be paid in cash and 50% in equity. The equity portion will be paid in three equal installments over three years, with the first installment vesting and paid no later than February 28, 2011, the second on the first anniversary, and the third on the second anniversary of the initial vesting date. The first installment of equity will be freely tradable shares, while subsequent installments will be restricted stock.

What happens to unvested bonuses if an employee leaves the company?

Generally, an employee forfeits any unvested portion of their bonus if employment terminates before the applicable vesting dates. However, unvested portions become immediately vested and payable if employment is terminated by the company without 'Cause' or by the employee for 'Good Reason', or in the event of the participant's death, disability, or a Change of Control before the bonus is fully vested.

Are there any limits on the total bonus payout?

Yes, the total annual cash bonus payment that may be paid to all participants is limited to $20,000,000 per year until the bonus pool is fully paid.

LNG 8-K: Regulation FD — Apr 14, 2010

Summary

Cheniere Energy, Inc. (LNG) announced the approval of its 2010 Goals & Bonus Plan, detailing a compensation structure designed to incentivize employees based on the company's financial performance. The plan links bonus awards to the achievement of specific margin goals derived from both short-term (under four years) and long-term (four years or more) contracts. This approach aims to align employee incentives with the company's strategic objectives and revenue generation from its core business activities. The bonus pool is funded by a combination of a minimum cash amount and a percentage of gross margins, with a distinction made between short-term and long-term contract contributions. A significant portion of the bonuses for long-term contracts will be paid in a mix of cash and equity, with vesting schedules extending over three years. This structure signals a commitment to retaining key talent by offering performance-based incentives that include equity, aligning employee interests with shareholder value creation.

Key Highlights

1Cheniere Energy established a 2010 Goals & Bonus Plan to link employee compensation to company performance.
2The bonus pool is funded by gross margins from short-term and long-term contracts, with a minimum funding of $5,000,000.
3Gross margins from short-term contracts (less than 4 years) and long-term contracts (4+ years) contribute to the bonus pool.
4Bonuses for long-term contracts will be paid 50% in cash and 50% in equity, subject to vesting.
5Equity portions of long-term bonuses will be delivered in installments over three years, with the first installment in freely tradable shares and subsequent installments in restricted stock.
6The total annual cash bonus payment to all participants is capped at $20,000,000.
7The plan includes provisions for vesting acceleration in cases of termination without cause, termination for good reason, death, disability, or change of control.

Cheniere Energy, Inc. 8-K Report, Regulation FD Disclosure (Apr 14, 2010)

Summary

Key Highlights

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