8-KLeadership ChangesExhibits & Filings

Cheniere Energy, Inc. 8-K Report, Executive Changes (Mar 8, 2011)

Filed March 8, 2011For Securities:LNG

Summary

Cheniere Energy, Inc. (LNG) filed an 8-K on March 7, 2011, to disclose its newly approved 2011-2013 Bonus Plan. This plan, effective for the 2011, 2012, and 2013 performance years, aims to incentivize employees through a two-pronged approach: the CQP Plan for Sabine Pass LNG operational staff and the Corporate Plan for other employees, including executive officers. The Corporate Plan is designed to align compensation with strategic objectives, encompassing operational, corporate, financial, and construction-related milestones for the Sabine Pass LNG liquefaction project. The bonus structure includes an Annual Cash Bonus Pool and a Long-Term Commercial Bonus Pool. The Annual Cash Bonus Pool has a base target of $5 million, with potential to reach $10 million or more based on achieving specific operational goals, negotiating key contracts (like a fixed-price EPC contract), and generating gross margins from short-term commercial activities. The Long-Term Commercial Bonus Pool is tied to entering into long-term contracts (4+ years) and is calculated as 11% of the net present value of margins from these contracts. This pool can be paid out in a combination of cash and equity, with vesting tied to construction commencement of the Sabine Pass LNG liquefaction project.

Key Highlights

  • 1Cheniere Energy approved a 2011-2013 Bonus Plan for its employees.
  • 2The plan is divided into the CQP Plan (for Sabine Pass LNG operational staff) and the Corporate Plan (for all other employees, including executives).
  • 3The Corporate Plan's bonuses are tied to achieving specific operational, corporate, financial, and construction goals related to the Sabine Pass LNG liquefaction project.
  • 4An Annual Cash Bonus Pool is established with a base of $5 million, potentially increasing to $10 million based on operational and contract milestones, and further by 12% of short-term commercial activity gross margins.
  • 5A Long-Term Commercial Bonus Pool is created, calculated as 11% of margins from contracts with terms of four years or more.
  • 6Payments from the Long-Term Commercial Bonus Pool can be a mix of cash (up to 25%) and equity, with vesting contingent on the commencement of construction of the Sabine Pass LNG liquefaction project.
  • 7Vesting of long-term bonuses may accelerate upon termination without Cause, termination for Good Reason, death, Disability, or Change of Control.

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