Summary
Cheniere Energy, Inc. (LNG) announced on December 14, 2016, that its Board of Directors, upon the recommendation of its Compensation Committee, approved the Key Executive Severance Pay Plan (Severance Plan) effective December 8, 2016. This plan is designed to provide financial and equity benefits to executive officers in the event of termination of employment under specific circumstances, including those related to a change in control. The Severance Plan aims to ensure executive retention and provide compensation security. The Severance Plan outlines specific provisions for severance payments and accelerated vesting of equity awards. In the event of a change in control, executive officers are entitled to full vesting of time-based incentive awards and target-level vesting for performance-based awards not tied to Total Shareholder Return (TSR), with TSR-based awards vesting based on actual TSR. Furthermore, if employment is terminated by the company without cause or by the executive for good reason within a specified period around a change in control, executives will receive substantial cash severance (up to 3 times salary plus target bonus for the CEO) and continued health benefits. Similar, though less generous, provisions apply in the absence of a change in control for qualifying terminations.
Key Highlights
- 1Cheniere Energy approved a Key Executive Severance Pay Plan effective December 8, 2016, to provide benefits upon termination under certain conditions.
- 2The Severance Plan includes provisions for enhanced benefits in the event of a change in control, including accelerated vesting of equity awards.
- 3In the case of a change in control followed by termination without cause or for good reason, the CEO is eligible for severance equal to 3 times salary plus target bonus, and other executives are eligible for 2 times salary plus target bonus.
- 4Severance benefits not related to a change in control also provide significant compensation, with the CEO receiving 2 times salary plus target bonus and other executives 1.5 times salary plus target bonus for qualifying terminations.
- 5The plan mandates full vesting of time-based incentive awards and target-level vesting for performance-based awards (excluding TSR) upon a change in control, regardless of termination.
- 6The company also announced 2016 cash bonus awards for its top executives: $2,303,938 for President and CEO Jack A. Fusco and $1,000,000 for Executive Vice President and CFO Michael Wortley.
- 7The Compensation Committee approved zero remaining shares available for issuance under the 2015 Employee Inducement Incentive Plan.