How will the new Long-Term Incentive Compensation Program (LTIP) work?

The LTIP links restricted stock awards to the increase in Cheniere's Total Shareholder Value (TSV) over specific performance periods. Awards are contingent on achieving certain annual and cumulative total shareholder return thresholds. For example, a 10% Share Pool of TSV Growth could be funded if both annual and cumulative total shareholder returns are 9% or greater.

What actions are required from Cheniere's stockholders related to these compensation changes?

Stockholders will be asked to approve both the 2014-2018 LTIP and an amendment to the 2011 Incentive Plan at the company's 2014 Annual Meeting, scheduled for June 2014. The plan amendment is necessary to increase the number of shares available for issuance by 30 million to support the LTIP awards.

What is the target bonus range for the CEO and other senior executives under the annual bonus program?

For 2014, the target bonus opportunity for Charif Souki (Chairman, CEO, and President) is 120% of his base salary, with a maximum of 300%. For other named executive officers, including the CFO, the target is 80% of base salary, with a maximum of 200%.

LNG 8-K: Leadership Changes & Regulation FD

Q: What are the key changes to Cheniere's executive compensation structure announced in this filing?

The filing announces the approved annual bonus opportunities for 2014 for executive officers and, more importantly, the adoption of the 2014-2018 Long-Term Incentive Compensation Program (LTIP). This new LTIP is a performance-based equity plan designed to reward management based on the company's Total Shareholder Value (TSV) growth.

Summary

Cheniere Energy, Inc. (LNG) filed an 8-K on February 4, 2014, to disclose updates regarding its executive compensation programs. The Compensation Committee approved the annual bonus opportunities for executive officers for the upcoming year, with the CEO eligible for a target bonus of 120% of base salary, potentially reaching 300%. Other named executive officers have a target bonus of 80% and a maximum of 200% of base salary. More significantly, the company announced the adoption of the 2014-2018 Long-Term Incentive Compensation Program (LTIP), subject to stockholder approval. This program is designed to align management and employee interests with those of shareholders by linking equity awards to increases in Total Shareholder Value (TSV). The LTIP will require stockholder approval at the June 2014 Annual Meeting, along with an amendment to the 2011 Incentive Plan to increase the share pool by 30 million shares to support these awards.

Key Highlights

1Cheniere's Compensation Committee set annual bonus ranges for executive officers for 2014, with the CEO targeting 120% and a maximum of 300% of base salary.
2A new 2014-2018 Long-Term Incentive Compensation Program (LTIP) was adopted, replacing the expired 2011-2013 Bonus Plan.
3The LTIP is performance-based, with equity awards tied to increases in Total Shareholder Value (TSV) and specific annual/cumulative total shareholder return hurdles.
4Specific TSV growth metrics and total shareholder return thresholds (e.g., 9% for full award funding) are outlined for the LTIP.
5Awards under the LTIP will be in the form of restricted stock, vesting over time, with provisions for accelerated vesting upon certain termination events or a Change of Control.
6Stockholder approval is required for the 2014-2018 LTIP and an amendment to the 2011 Incentive Plan (to increase shares by 30 million) at the June 2014 Annual Meeting.

Cheniere Energy, Inc. 8-K Report, Executive Changes (Feb 4, 2014)

Summary

Key Highlights

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