DEF 14A of Cheniere Energy, Inc.
Filed Apr 15, 2024 · FY20230001193125-24-095542
By order of the Board of Directors
| PAY VERSUS PERFORMANCE | 72 | | PROPOSAL 2 – ADVISORY AND NON-BINDING VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS FOR 2023 | 77 | | AUDIT COMMITTEE MATTERS | 78 | | PROPOSAL 3 – RATIFICATION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2024 | 80 | | PROPOSAL 4 – APPROVAL OF THE CHENIERE ENERGY, INC. AMENDED AND RESTATED 2020 INCENTIVE PLAN | 81 | | PROPOSAL 5 – APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO LIMIT THE PERSONAL LIABILITY OF OFFICERS AS PERMITTED BY LAW | 91 | | FREQUENTLY ASKED QUESTIONS | 93 | | OTHER MATTERS | 98 | | SHAREHOLDER PROPOSALS | 98 | | DIRECTOR NOMINEES | 98 | | COMMUNICATIONS WITH THE BOARD | 99 | | HOUSEHOLDING OF PROXY MATERIALS | 99 | | AVAILABILITY OF DOCUMENTS | 99 | | APPENDIX A: CHENIERE ENERGY, INC. AMENDED AND RESTATED 2020 INCENTIVE PLAN | A-1 | | APPENDIX B: DEFINITION OF CUMULATIVE DISTRIBUTABLE CASH FLOW PER SHARE AND ABSOLUTE TOTAL SHAREHOLDER RETURN FOR 2023 LTI AWARDS | B-1 | | APPENDIX C: DEFINITION OF CUMULATIVE DISTRIBUTABLE CASH FLOW PER SHARE AND ABSOLUTE TOTAL SHAREHOLDER RETURN FOR 2024 LTI AWARDS | C-1 | | APPENDIX D: DEFINITION AND RECONCILIATION OF NON-GAAP MEASURES | D-1 | | APPENDIX E: PROPOSED AMENDMENT TO THE RESTATED CERTIFICATION OF INCORPORATION OF CHENIERE ENERGY, INC. | E-1 |
2023 Compensation Highlights
| • | The annual incentive plan generated an above-target payout for our NEOs based upon the Company’s 2023 performance across multiple financial, operating, safety and strategic metrics. |
2023 Compensation Highlights
| • | Performance share units awarded in 2021 generated an above-target payout for our NEOs based upon the Company’s performance across the performance metrics of cumulative Distributable Cash Flow per share and Absolute Total Shareholder Return over the 2021-2023 period. |
2023 Compensation Highlights
| • | In 2023, our annual performance scorecard included ESG metrics, inclusive of safety, that represented 30% of the annual performance scorecard. |
2023 Compensation Highlights
| • | Minimum Vesting Requirements: Awards under the A&R 2020 Plan will be subject to a minimum vesting schedule of at least 12 months following the date of grant of the award; provided, however, that up to 5% of the shares underlying awards granted after the Effective Date may be subject to vesting schedules of less than 12 months. For purposes of this minimum vesting requirement, awards granted to non-employee directors in respect of regular annual fees will be deemed to satisfy the requirement, provided that such award vests no earlier than 50 weeks following the immediately preceding year’s annual meeting, and provided further that awards granted to non-employee directors in substitution for cash compensation otherwise due and payable to such non-employee director will not be subject to such requirement. |
2023 Compensation Highlights
| • | No Discount or Repriced Options: The A&R 2020 Plan does not permit discounted stock options, or repricing options to reduce the exercise price without shareholder approval. |
Director Diversity and Core Competencies
Director Diversity and Core Competencies Our director nominees represent a diverse mix of directors who complement each other to create a well-rounded boardroom, and each adds:
Director Diversity and Core Competencies
| • | A deep commitment to stewardship |
Director Diversity and Core Competencies
| • | A proven record of success |
Director Diversity and Core Competencies
| • | Unique and valuable insight |
Director Diversity and Core Competencies
Our director nominees also reflect a range of diversity characteristics, as shown below. The table below summarizes certain of the key qualifications, skills and attributes of our director nominees. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience as we look to each director to be knowledgeable in these areas; rather, the indicator represents that the item is a core competency that contributed to his or her nomination to the Board. Our director nominees’ biographies describe each director’s background and relevant experience in more detail.
Director Diversity and Core Competencies
| DIRECTOR SKILLS, EXPERIENCE AND DEMOGRAPHIC MATRIX | | | | | | | | | | | Key Skills and Experience | | | | | | | | | | | Corporate Finance: Has an understanding of finance and financial reporting processes | | | | | | | | | | | Energy Industry Experience: Contributes valuable perspective on broader trends and issues specific to our operations in the energy industry | | | | | | | | | | | Executive Leadership: Has a demonstrated record of leadership and valuable perspectives relating to the management and oversight of large and complex organizations | | | | | | | | | | | Governance: Contributes to the Board’s understanding of best practices in corporate governance matters | | | | | | | | | |
Director Diversity and Core Competencies
| 12 | CHENIERE |
Director Diversity and Core Competencies
DIRECTORS AND NOMINEES
Director Diversity and Core Competencies
| DIRECTOR SKILLS, EXPERIENCE AND DEMOGRAPHIC MATRIX | | | | | | | | | | | Government / Regulatory: Has an understanding of the role governmental and regulatory actions and decisions may have on our business and contributes to the Board’s ability to navigate complex regulatory and governmental dynamics | | | | | | | | | | | HSE/Sustainability: Strengthens the Board’s oversight and understanding of the interrelationship among environmental and safety matters or sustainability, and our operational activities and strategy | | | | | | | | | | | Human Capital Management: Has an understanding of human resources and best practices to enhance the attraction, motivation, and retention of a talented workforce | | | | | | | | | | | International Experience: Provides valuable insights into the international aspects of our business and operations | | | | | | | | | | | Operations: Provides operational knowledge to aid in managing risks inherent in our business | | | | | | | | | | | Public Company Director: Serves or has served on other public company boards | | | | | | | | | | | Risk Oversight / Crisis Management: Has an understanding of, and experience with, the risk oversight necessary for organizational performance and security | | | | | | | | | | | Trading Financial Commodities: Has knowledge of domestic and global energy commodities markets and trading of financial commodities | | | | | | | | | | | Age (as of May 23, 2024) | 71 | 61 | 65 | 58 | 61 | 61 | 43 | 72 | 69 | | Gender Identity | M | M | F | M | F | F | M | M | M | | Racial / Ethnic Diversity | | | | ● | ● | | | | |
Director Diversity and Core Competencies
There are 9 nominees standing for election as directors at the Meeting. Each nominee, if elected, will hold office for a one-year term expiring at the 2025 Annual Meeting of Shareholders and will serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Each of the director nominees has consented to serve as a director if elected or re-elected. Each of the director nominees currently serves on the Board. Directors are elected annually by a majority of votes cast (in uncontested elections) with respect to such director nominee. Unless your proxy specifies otherwise, it is intended that the shares represented by your proxy will be voted for the election of these 9 nominees. If you are a beneficial owner, your bank, broker or other holder of record is not permitted to vote your shares on Proposal 1 to elect directors if the bank, broker or other holder of record does not receive specific voting instructions from you. The Board is unaware of any circumstances likely to render any nominee unavailable.
Director Diversity and Core Competencies
| | The Board unanimously recommends a vote FOR the election of the 9 nominees as directors of the Company to hold office for a one-year term expiring at the 2025 Annual Meeting of Shareholders or until their successors are duly elected and qualified. |
Director Diversity and Core Competencies
| 2024 PROXY STATEMENT | 13 |
Director Diversity and Core Competencies
DIRECTOR NOMINATIONS AND QUALIFICATIONS Director Nomination Policy and Procedures. Our Director Nomination Policy and Procedures is attached to the Governance and Nominating Committee’s written charter as Exhibit A, which is available on our website at www.cheniere.com. The Governance and Nominating Committee may consider suggestions for potential director nominees to the Board from any source, including current members of the Board and our management, advisors and shareholders, and will review and consider any such candidates submitted by a shareholder or shareholder group in the same manner as all other candidates. The Governance and Nominating Committee evaluates potential nominees by reviewing their qualifications and any other information deemed relevant. Director nominees are recommended to the Board by the Governance and Nominating Committee. The full Board will select and recommend candidates for nomination as directors for shareholders to consider and vote upon at the annual shareholders’ meeting. Qualifications for consideration as a director nominee vary according to the particular areas of expertise being sought as a complement to the existing Board composition. However, minimum criteria for selection of members to serve on our Board include the following:
Director Diversity and Core Competencies
| • | highest professional and personal ethical standards and integrity; |
Director Diversity and Core Competencies
| • | high level of education and/or business experience; |
Director Diversity and Core Competencies
| • | broad-based business acumen; |
Director Diversity and Core Competencies
| • | commitment to understand the Company’s business and industry; |
Director Diversity and Core Competencies
| • | sufficient time to effectively carry out their duties; |
Director Diversity and Core Competencies
| • | strategic thinking and willingness to share ideas; |
Director Diversity and Core Competencies
| • | loyalty and commitment to driving the success of the Company; |
Director Diversity and Core Competencies
| • | network of business and industry contacts; and |
Director Diversity and Core Competencies
| • | diversity of experiences, expertise, backgrounds and other demographics among members of the Board. |
Director Diversity and Core Competencies
Practices for Considering Diversity. The minimum criteria for selection of members to serve on our Board are designed to ensure that the Governance and Nominating Committee selects director nominees taking into consideration that the Board will benefit from having directors that represent a diversity of experience and backgrounds. Director nominees are selected so that the Board represents a diversity of experience in areas needed to foster the Company’s business success, including experience in the energy industry, finance, consulting, international affairs, public service, governance, regulatory compliance and ESG. Each year the Board and each committee participates in a self-assessment or evaluation of the effectiveness of the Board and its committees. These evaluations assess the diversity of talents, expertise and occupational and personal backgrounds and attributes (such as gender, ethnicity and age) of the Board members. Over 40% of our director nominees are diverse based on gender or ethnicity. Shareholder Nominations for Director (other than Proxy Access). A shareholder of the Company may nominate a candidate or candidates for election to the Board at an annual meeting of shareholders if such shareholder (1) was a shareholder of record at the time the notice provided for below is delivered to the Corporate Secretary, (2) is entitled to vote at the meeting of shareholders called for the election of directors and is entitled to vote upon such election and (3) complies with the notice procedures and other requirements set forth in our Bylaws, as amended (the “Bylaws”). Nominations made by a shareholder must be made by giving timely notice in writing to the Corporate Secretary of the Company at the following address: Corporate Secretary, Cheniere Energy, Inc., 845 Texas Avenue, Suite 1250, Houston, Texas 77002. To be timely, a shareholder’s notice must be delivered not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting. A shareholder’s notice must include information about the shareholder and the nominee, as required by our Bylaws, which are available on our website at www.cheniere.com. Director Nominations for Inclusion in Proxy Statement (Proxy Access). As set forth in our Bylaws, a shareholder, or group of up to 20 shareholders, continuously owning at least 3% of the Company’s common stock for at least the prior three consecutive years (and meeting the other requirements set forth in our Bylaws) may nominate for election to our Board and inclusion in our proxy statement for our annual meeting of shareholders up to 20% of the number of directors then serving on our Board. The notice must include all information required by our Bylaws. In addition to complying with the other requirements set forth in our Bylaws, an eligible shareholder must provide timely notice in writing to the Corporate Secretary of the Company at the following
Director Diversity and Core Competencies
| 14 | CHENIERE |
Director Diversity and Core Competencies
DIRECTOR NOMINATIONS AND QUALIFICATIONS address: Corporate Secretary, Cheniere Energy, Inc., 845 Texas Avenue, Suite 1250, Houston, Texas 77002. To be timely for purposes of proxy access, a shareholder’s notice must be delivered not later than the close of business on the 120th day, nor earlier than the 150th day, prior to the first anniversary of the date that the Company first mailed its proxy statement to shareholders for the prior year’s annual meeting of shareholders. However, if (and only if) the annual meeting is not scheduled to be held within a period that commences 30 days before such anniversary date and ends 30 days after such anniversary date (an annual meeting date outside such period being referred to herein as an “Other Meeting Date”), notice must be given in the manner provided in our Bylaws by the later of the close of business on the date that is 180 days prior to such Other Meeting Date and the 10th day following the date on which public announcement of such Other Meeting Date is first made. Director Qualifications. The Board has concluded that, in light of our business and structure, each of our director nominees possesses relevant experience, qualifications, attributes and skills and, as of the date of this Proxy Statement, is qualified to and should serve on our Board. The primary qualifications of our directors are further discussed under “Director Biographies” below. Director Retirement Policy. The Board maintains a mandatory director retirement policy that requires each director who has attained the age of 75 to retire from the Board at the annual meeting of shareholders of the Company held in the year in which his or her current term expires, unless the Board determines such mandate for a particular director is not at the time in the best interests of the Company. Additionally, in order to encourage Board refreshment, the Board revised the director retirement policy in 2020 to provide that directors who have reached 15 years of service on the Board will also not be eligible for re-nomination to the Board at the annual meeting of shareholders of the Company in the year at which such director’s current term expires, subject to Board discretion. The Board believes this policy helps to ensure a healthy rotation of directors, which promotes the continued influx of new ideas and perspectives to the Board. Recent Board Refreshment. As a result of our focus on Board refreshment and pursuant to our director retirement policy, in 2022 one of our long-serving directors, Mr. David B. Kilpatrick, retired, and Mr. Edwards joined the Board. In addition, Ms. Gray was nominated to join the Board in 2023 as a result of another long-serving director, Ms. Vicky Bailey, not standing for re-election at the 2023 Annual Meeting of Shareholders (the “2023 Annual Meeting”). Pursuant to an Investors’ and Registration Rights Agreement that was entered into by the Company, Cheniere Energy Partners GP, LLC, CQP Holdco and various other related parties in 2012, Mr. Peak was appointed to the Board to replace Mr. Runkle in April 2024. In addition to the minimum criteria described above, the Governance and Nominating Committee evaluated the skill sets needed to maximize Board effectiveness and support the strategic direction of the Company. Of our nine director nominees, three have served on the Board for approximately ten years or more and five have been on our Board for less than five years. We believe this achieves the right balance between new directors who bring new ideas and insights and longer-serving directors with deep institutional knowledge of our Board and our Company.
Director Diversity and Core Competencies
| 2024 PROXY STATEMENT | 15 |
Director Diversity and Core Competencies
| JACK A. FUSCO PRESIDENT & CEO | AGE: 61 DIRECTOR SINCE: 2016 | |
Director Diversity and Core Competencies
Jack A. Fusco is a director and the President and Chief Executive Officer of Cheniere. Mr. Fusco has served as President and Chief Executive Officer since May 2016 and as a director since June 2016. In addition, Mr. Fusco serves as Chairman, President and Chief Executive Officer of Cheniere Energy Partners GP, LLC (“Cheniere Partners GP”), a wholly-owned subsidiary of Cheniere and the general partner of Cheniere Partners. Mr. Fusco served as Chairman, President and Chief Executive Officer of Cheniere Energy Partners LP Holdings, LLC (“Cheniere Holdings”) from June 2016 to September 2018. Mr. Fusco is also President and Chief Executive Officer of the general partner of Sabine Pass LNG, L.P. and Chief Executive Officer of Sabine Pass Liquefaction, LLC. Mr. Fusco received recognition as Best CEO in the electric industry by Institutional Investor in 2012 as ranked by all industry analysts and for Best Investor Relations by a CEO or Chairman among all mid-cap companies by IR Magazine in 2013. Institutional Investor again recognized Mr. Fusco for the 2020 and 2023 All-American Executive Team Best CEO in the natural gas industry. Mr. Fusco served as Chief Executive Officer of Calpine Corporation (“Calpine”) from August 2008 to May 2014 and as Executive Chairman of Calpine from May 2014 through May 11, 2016. Mr. Fusco served as a member of the board of directors of Calpine from August 2008 until March 2018, when the sale of Calpine to an affiliate of Energy Capital Partners and a consortium of other investors was completed. Mr. Fusco was recruited by Calpine’s key shareholders in 2008, just as that company was emerging from bankruptcy. Calpine grew to become America’s largest generator of electricity from natural gas, safely and reliably meeting the needs of an economy that demands cleaner, more fuel-efficient and dependable sources of electricity. As Chief Executive Officer of Calpine, Mr. Fusco managed a team of approximately 2,300 employees and led one of the largest purchasers of natural gas in America, a successful developer of new gas-fired power generation facilities and a company that prudently managed the inherent commodity trading and balance sheet risks associated with being a merchant power producer. Mr. Fusco’s career of over 40 years in the energy industry began with his employment at Pacific Gas & Electric Company upon graduation from California State University, Sacramento with a Bachelor of Science in Mechanical Engineering in 1984. He joined Goldman Sachs 13 years later as a Vice President with responsibility for commodity trading and marketing of wholesale electricity, a role that led to the creation of Orion Power Holdings, an independent power producer that Mr. Fusco helped found with backing from Goldman Sachs, where he served as President and Chief Executive Officer from 1998-2002. In 2004, he was asked to serve as Chairman and Chief Executive Officer of Texas Genco LLC by a group of private institutional investors, and successfully managed the transition of that business from a subsidiary of a regulated utility to a strong and profitable independent company, generating a more than 5-fold return for shareholders upon its merger with NRG in 2006. Mr. Fusco is currently on the board of directors of the American-Italian Cancer Foundation, a non-profit organization supporting cancer research and education. Mr. Fusco brings his prior experience leading successful energy industry companies and his perspective as President and Chief Executive Officer of Cheniere.
Director Diversity and Core Competencies
| 16 | CHENIERE |
Director Diversity and Core Competencies
| G. ANDREA BOTTA CHAIRMAN OF THE BOARD AND CHAIRMAN OF GOVERNANCE AND NOMINATING COMMITTEE | AGE: 71 DIRECTOR SINCE: 2010 | |
Director Diversity and Core Competencies
G. Andrea Botta is the Chairman of the Board and Chairman of our Governance and Nominating Committee. Mr. Botta has served as President of Glenco LLC (“Glenco”), a private investment company since February 2006. Prior to joining Glenco, Mr. Botta served as Managing Director of Morgan Stanley from 1999 to February 2006. Before joining Morgan Stanley, he was President of EXOR America, Inc. (formerly IFINT-USA, Inc.) from 1993 until September 1999 and for more than five years prior thereto, Vice President of Acquisitions of IFINT-USA, Inc. From March 2008 until February 2018, Mr. Botta served on the board of directors of Graphic Packaging Holding Company. Mr. Botta earned a degree in Economics and Business Administration from the University of Torino in 1976. Skills and Qualifications: Mr. Botta brings a unique international perspective to our Board and significant investing expertise. He has over 30 years of investing experience primarily in private equity investing.
Director Diversity and Core Competencies
| PATRICIA K. COLLAWN MEMBER OF AUDIT COMMITTEE AND COMPENSATION COMMITTEE | AGE: 65 DIRECTOR SINCE: 2021 | |
Director Diversity and Core Competencies
Ms. Collawn is a member of our Audit Committee and Compensation Committee. Ms. Collawn is the Chairman and Chief Executive Officer of PNM Resources, Inc., a publicly-traded energy holding company based in New Mexico, becoming Chairman in 2012 and CEO in 2010. From 2010 to May 2022, Ms. Collawn also served as President of PNM Resources. Ms. Collawn joined PNM Resources in 2007 as President, Utilities, prior to her promotion to President and Chief Operating Officer in 2008. From 2005 to 2007, Ms. Collawn served as President and Chief Executive Officer of Public Service Company of Colorado, an operating utility that is a subsidiary of Xcel Energy, Inc. Ms. Collawn previously served on the board of directors of Equitrans Midstream Corporation, a publicly traded natural gas midstream company, from April 2020 to April 2023, EVgo Services, LLC, a publicly traded builder, owner and operator of DC fast charging for electric vehicles in the U.S., from July 2021 to March 2022, and CTS Corporation, a publicly traded designer and manufacturer of sensors, actuators and electronic components for various industries, from 2003 to May 2021. Ms. Collawn also previously served as Chairman of the Electric Power Research Institute, an independent, non-profit center for public interest energy and environmental research, including sustainability and carbon reduction matters, and Chairman of the Edison Electric Institute, a national association of investor-owned electric companies. Ms. Collawn received a B.A. from Drake University and an M.B.A. from Harvard Business School. As a senior executive in the power utilities sector for more than 25 years, Ms. Collawn has an in-depth understanding of the complex regulatory structure of the utility industry, as well as substantial operations experience. Along with her executive leadership experience and commercial and operational expertise, Ms. Collawn brings a focus on corporate governance, cybersecurity and environmental and sustainability matters to our Board.
Director Diversity and Core Competencies
| 2024 PROXY STATEMENT | 17 |
Director Diversity and Core Competencies
| BRIAN E. EDWARDS MEMBER OF AUDIT COMMITTEE AND COMPENSATION COMMITTEE | AGE: 58 DIRECTOR SINCE: 2022 | |
Director Diversity and Core Competencies
Mr. Edwards is a member of our Audit Committee and Compensation Committee. Mr. Edwards has served as a Senior Vice President of Caterpillar Inc., a construction equipment manufacturer, since January 2021, with responsibility for the Caterpillar Remanufacturing Division, which offers high-quality, lower-cost replacement parts remanufactured from genuine Caterpillar components. Mr. Edwards joined Caterpillar in 2010 as Vice President of Sales and Marketing at the company’s wholly owned subsidiary, Progress Rail. He continued rising in the leadership ranks at Progress Rail, serving in many roles, including Executive Vice President of rolling stock. Prior to joining Caterpillar, Mr. Edwards spent more than 20 years gaining expertise in manufacturing, engineering and supply chain roles at GE and General Motors. Mr. Edwards holds a bachelor’s degree in Chemical Engineering from Youngstown State University and a master’s degree in Manufacturing Management from GMI Engineering & Management Institute (now Kettering University). Mr. Edwards completed the Caterpillar “Digging Deep” executive development program through Stanford University. Mr. Edwards is affiliated with United Way, March of Dimes and Big Brothers Big Sisters of America. Skills and Qualifications: Mr. Edwards provides a differentiated and meaningful perspective to the Board through his deep knowledge of industrial manufacturing, engineering and supply chain, as well as his decades of leadership within large organizations.
Director Diversity and Core Competencies
| DENISE GRAY MEMBER OF AUDIT COMMITTEE AND COMPENSATION COMMITTEE | AGE: 61 DIRECTOR SINCE: 2023 | |
Director Diversity and Core Competencies
Ms. Gray has served as the Chief Executive Officer of DKTN Consulting LLC, a global automotive systems and energy storage advisory firm, since May 2023, and previously served as Director External Affairs and Government Relations, North America for LG Energy Solution Michigan Inc., the North American subsidiary of LG Energy Solution Ltd, a manufacturer of large lithium-ion battery cells and packs for electric vehicles and other energy storage applications, from March 2022 until her retirement in May 2023. Ms. Gray previously served as CEO/President and Board Member of LG Chem Power Inc./LG Chem Michigan Inc./LG Energy Solution Michigan Inc. from September 2015 to March 2022. In that position, her team provided battery solutions for automotive and non-automotive applications. Ms. Gray served on the board of directors for Tenneco from March 2019 to November 2022; has served on the board of directors of Canadian National Railway since April 2021 and the Board on Energy and Environmental Systems since January 2020, and on the Advisory Boards of the Joint Office of Energy and Transportation Electric Vehicle Working Group since August 2023 and the United States Secretary of Energy since October 2021; and as Member of The National Academy of Engineering since February 2022. Ms. Gray previously held automotive leadership positions with AVL List GmbH in Graz, Austria from 2013 to 2015 and Atieva, Inc. in Redwood City, California from 2010 to 2013. The vast majority of Ms. Gray’s 35+ year professional career was with General Motors from 1986 to 2010, where she spearheaded efforts in vehicle electrical, powertrain system controls, and software, including battery systems. Ms. Gray holds a B.S. in Electrical Engineering from Kettering University and a M.S. in Engineering Management of Technology from Rensselaer Polytechnic Institute. Ms. Gray has extensive experience in the automotive industry, including leadership roles of companies at the forefront of battery technology, bringing insights into energy transition issues and engineering expertise to our Board.
Director Diversity and Core Competencies
| 18 | CHENIERE |
Director Diversity and Core Competencies
| LORRAINE MITCHELMORE MEMBER OF AUDIT COMMITTEE AND GOVERNANCE AND NOMINATING COMMITTEE | AGE: 61 DIRECTOR SINCE: 2021 | |
Director Diversity and Core Competencies
Ms. Mitchelmore is a member of our Audit Committee and Governance and Nominating Committee. Ms. Mitchelmore was recently the President and Chief Executive Officer of Enlighten Innovations Inc., a Calgary based clean technology company, from May 2017 to September 2018. Prior to that, she was President and Canada Country Chair of Shell Canada Limited and Executive Vice President, Americas Heavy Oil for Royal Dutch Shell. She has more than 30 years of international oil and gas industry experience. Throughout her career, she has served with increasing responsibility in operational, strategy, and commercial roles. Prior to joining Shell in 2002, she worked with BHP Petroleum, Chevron, and Petro-Canada. Ms. Mitchelmore has served as a director of the Bank of Montreal, a diversified financial services provider, since May 2015, where she currently serves as Chair of the Human Resources Committee, and Suncor Energy Inc., a premier integrated energy company, since November 2019, where she currently serves as Chair of the Environment, Health, Safety and Sustainable Development Committee. She has also served on the Board of Directors of the Alberta Investment Management Corporation (AIMCo) since January 2022. Ms. Mitchelmore previously served on the Board of Advisers of Catalyst Canada from 2018 to 2023 and the board of directors of TransMountain Corporation from November 2018 to December 2019. Ms. Mitchelmore was an associate of the Creative Destruction Lab from 2018 to 2023 where she was a mentor to many early-stage energy transition companies. She is co-founder and co-chair of the Smart Prosperity Initiative, an organization focused on harnessing new thinking to accelerate Canada’s transition to a stronger, cleaner economy. From 2017 to 2018, she chaired the Resources of the Future Economic Strategy table for the Canadian federal government. She has been named a fellow of the Canadian Academy of Engineering, awarded the Catalyst Canada Champion Honors Award in 2014, recognizing commitment to Diversity and Inclusion, and was a recipient of Canada’s 2016 Clean16 award for leadership in advancing sustainable development in Canada. Ms. Mitchelmore holds a BSc in Geophysics from Memorial University of Newfoundland, an MSc in Geophysics from the University of Melbourne, Australia and an MBA from Kingston Business School in London, England. Skills and Qualifications: Ms. Mitchelmore has over 30 years of international oil and gas industry experience, as well as significant executive, operational, strategy and commercial experience. Ms. Mitchelmore also brings meaningful experience with energy transition issues and sustainable development to our Board.
Director Diversity and Core Competencies
| SCOTT PEAK DIRECTOR | AGE: 43 DIRECTOR SINCE: 2024 | |
Director Diversity and Core Competencies
Mr. Peak is a Managing Partner, Co-President, and Head of North America for Brookfield’s Infrastructure Group. In this role, he is responsible for regional oversight and investment strategy leadership and is involved in the screening and evaluation of global investment initiatives. Mr. Peak previously served as Chief Investment Officer for North America for Brookfield’s Infrastructure Group. Prior to joining Brookfield in January 2016, Mr. Peak spent a decade at Macquarie Group Ltd., where he focused on the infrastructure sector. Previously, Mr. Peak worked in the mergers and acquisitions group at Dresdner Kleinwort Wasserstein. Mr. Peak previously served as a director of the Company from April 2022 to April 2023 and the general partner of Cheniere Partners from September 2020 to April 2022 and April 2023 to April 2024. Mr. Peak holds a Master of Finance with distinction from INSEAD and a B.A. in Economics from Bates College. Mr. Peak brings energy infrastructure industry expertise and a unique financial perspective to our Board based on his extensive investment experience with Brookfield Infrastructure. Mr. Peak’s appointment to the Board of Cheniere was made pursuant to an Investors’ and Registration Rights Agreement that was entered into by the Company, Cheniere Energy Partners GP, LLC, CQP Holdco and various other related parties in connection with CQP Holdco’s purchase of Class B units in Cheniere Partners.
Director Diversity and Core Competencies
| 2024 PROXY STATEMENT | 19 |
Director Diversity and Core Competencies
| DONALD F. ROBILLARD, JR. CHAIRMAN OF AUDIT COMMITTEE AND MEMBER OF GOVERNANCE AND NOMINATING COMMITTEE | AGE: 72 DIRECTOR SINCE: 2014 | |
Director Diversity and Core Competencies
Donald F. Robillard, Jr. is the Chairman of our Audit Committee and a member of our Governance and Nominating Committee. Mr. Robillard served as a director and the Executive Vice President, Chief Financial Officer and Chief Risk Officer of Hunt Consolidated, Inc. (“Hunt”), a private holding company with interests in oil and gas exploration and production, refining, real estate development, private equity investments and ranching, from July 2015 until his retirement on January 31, 2017. Mr. Robillard began his association with Hunt in 1983 as Manager of International Accounting for Hunt Oil Company, Inc., a wholly-owned subsidiary of Hunt. Serving nine of his 34 years of service to the Hunt organization in Yemen in various accounting, finance and management positions, Mr. Robillard returned to the United States to join Hunt’s executive team in 1992. Mr. Robillard was named Senior Vice President and Chief Financial Officer of Hunt in April 2007. Mr. Robillard also served, from February 2016 through August of 2017, as Chief Executive Officer and Chairman of ES Xplore, LLC, a direct hydrocarbon indicator technology company which in 2016 was spun out of Hunt. He is currently President of Robillard Consulting, LLC, an oil and gas advisory firm. Mr. Robillard is currently on the board of directors of Helmerich & Payne, Inc., a publicly-traded oil and gas drilling company. He is a Certified Public Accountant, a member of the American Institute of Certified Public Accountants, the Texas Society of Certified Public Accountants, the National Association of Corporate Directors (NACD Directorship Certified), Financial Executives International and an advisory board member of the Institute for Excellence in Corporate Governance at the Naveen Jindal School of Management at the University of Texas at Dallas. Mr. Robillard received a B.B.A. from the University of Texas, Austin. Skills and Qualifications: Mr. Robillard has over 40 years of experience in the oil and gas industry and over 25 years of senior management experience. Mr. Robillard brings significant executive-level experience in the oil and gas industry, including experience with project financing for LNG facilities.
Director Diversity and Core Competencies
| NEAL A. SHEAR CHAIRMAN OF COMPENSATION COMMITTEE AND MEMBER OF GOVERNANCE AND NOMINATING COMMITTEE | AGE: 69 DIRECTOR SINCE: 2014 | |
Director Diversity and Core Competencies
Neal A. Shear is the Chairman of our Compensation Committee and a member of our Governance and Nominating Committee. Since June 2017, Mr. Shear has served as Senior Advisor and Chair of the Advisory Committee of Onyxpoint Global Management LP, an alternative asset management firm. Mr. Shear served as Interim Special Advisor to the Chief Executive Officer of Cheniere from May 2016 to November 2016 and as Interim Chief Executive Officer and President of Cheniere from December 2015 to May 2016. Mr. Shear was the Chief Executive Officer of Higgs Capital Management, a commodity focused hedge fund from January 2012 until September 2014. Prior to Higgs Capital Management, Mr. Shear served as Global Head of Securities at UBS Investment Bank from January 2010 to March of 2011. Previously, Mr. Shear was a Partner at Apollo Global Management, LLC, where he served as the Head of the Commodities Division. Prior to Apollo Global Management, Mr. Shear spent 26 years at Morgan Stanley serving in various roles including Head of the Commodities Division, Global Head of Fixed Income, Co-Head of Institutional Sales and Trading, and Chair of the Commodities Business. Mr. Shear has served as a director and limited partner of ESG Energy Holdings LLC, a company formed to buy refining and other assets for the purpose of improving their environmental footprint in the production of energy-related products, since February 2022; as an Advisor to WasteFuel, a waste to fuels company that converts municipal waste into biofuel, since March 2022; as a director of Galileo Technologies S.A., a global provider of modular technologies for compressed natural gas and LNG production and transportation, since February 2017; and as a director of Narl Refining Inc., the refining arm of North Atlantic Holdings St John’s Newfoundland, since November 2014. Mr. Shear received a B.S. from the University of Maryland, Robert H. Smith School of Business Management in 1976 and an M.B.A. from Cornell University, Johnson School of Business in 1978. Mr. Shear brings a unique financial and trading perspective to our Board based on his more than 30 years of experience managing commodity activity and investments
Director Diversity and Core Competencies
| 20 | CHENIERE |
Director Diversity and Core Competencies
BOARD COMMITTEE MEMBERSHIP AND MEETING ATTENDANCE The following table shows our current directors and director nominees’ fiscal year 2023 membership and chairpersons of our Board committees, Board and committee meetings held and attendance as a percentage of meetings eligible to attend. The current Chair of the Board and each committee is indicated in the table.
Director Diversity and Core Competencies
| | NUMBER OF MEETINGS HELD | BOTTA | FUSCO | COLLAWN | EDWARDS | GRAY | MITCHELMORE | PEAK | ROBILLARD | SHEAR | | Board | 11 | 100% Chair | 100% | 91% | 100% | 100% | 100% | 100% | 100% | 91% | | Audit Committee | 8 | — | — | 87.5% | 100% | 100% | 100% | — | 100% Chair | — | | Governance and Nominating Committee | 6 | 100% Chair | — | — | — | — | 100% | — | 100% | 100% | | Compensation Committee | 5 | — | — | 100% | 100% | 100% | — | — | — | 100% Chair |
Director Diversity and Core Competencies
DIRECTOR INDEPENDENCE The Board determines the independence of each director and nominee for election as a director in accordance with the rules and regulations of the SEC and the New York Stock Exchange (“NYSE”) independence standards, which are listed below. The Board also considers relationships that a director may have:
Director Diversity and Core Competencies
| • | as a partner, shareholder or officer of organizations that do business with or provide services to Cheniere; |
Director Diversity and Core Competencies
| • | as an executive officer of charitable organizations to which we have made or make contributions; and |
Director Diversity and Core Competencies
| • | that may interfere with the exercise of a director’s independent judgment. |
Director Diversity and Core Competencies
The NYSE independence standards state that the following list of persons will not be considered independent:
Director Diversity and Core Competencies
| • | a director who is, or during the past three years was, employed by the Company or by any parent or subsidiary of the Company other than prior employment as an interim executive officer; |
Director Diversity and Core Competencies
| • | a director who accepts, or has an immediate family member who accepts, any compensation from the Company or any parent or subsidiary of the Company in excess of $120,000 during any period of 12 consecutive months within the past three years, other than compensation for Board or committee services and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), and not including compensation paid to an immediate family member who is a non-executive employee of the Company or compensation received for former service as an interim executive officer; |
Director Diversity and Core Competencies
| • | a director who is an immediate family member of an individual who is, or has been in any of the past three years, employed by the Company or any parent or subsidiary of the Company as an executive officer; |
Director Diversity and Core Competencies
| • | a director who is a current employee, or has an immediate family member who is a current executive officer, of a company that has made payments to, or received payments from, the Company or any parent or subsidiary of the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues; |
Director Diversity and Core Competencies
| • | a director who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of the Company’s or any parent’s or subsidiary’s executive officers serve on the compensation committee of such other entity; or |
Director Diversity and Core Competencies
| 2024 PROXY STATEMENT | 21 |
Director Diversity and Core Competencies
| • | a director who is a current partner or employee of the Company’s or any parent’s or subsidiary’s internal or external auditor, who has an immediate family member who is a current partner of such internal or external auditor, who has an immediate family member who is a current employee of such outside auditor and works on the Company’s or any parent’s or subsidiary’s audit, or who was a partner or employee, or has an immediate family member who was a partner or employee, of such internal or external auditor and worked on the Company’s or any parent’s or subsidiary’s audit at any time during any of the past three years. |
Director Diversity and Core Competencies
As of January 2024, the Board determined that director nominees Messrs. Botta, Edwards, Robillard, and Shear and Mses. Collawn, Gray and Mitchelmore are independent, and that none of them has a relationship that may interfere with the exercise of his or her independent judgment. In addition, the Board previously determined that Ms. Vicky Bailey, who served as a director for a portion of 2023, was independent. BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT Board Leadership Structure. Mr. Botta serves as the Non-Executive Chairman of the Board. Mr. Fusco serves as President and CEO of the Company. The Company has in place strong governance mechanisms to ensure the continued accountability of the CEO to the Board and to provide strong independent leadership, including the following:
Director Diversity and Core Competencies
| • | the Non-Executive Chairman of the Board provides independent leadership to the Board and ensures that the Board operates independently of management and that directors have an independent leadership contact; |
Director Diversity and Core Competencies
| • | each of the Board’s standing committees, consisting of the Audit, Compensation and Governance and Nominating Committees, are chaired by and comprised solely of non-employee directors who meet the independence requirements under the NYSE listing standards and the SEC; |
Director Diversity and Core Competencies
| • | the independent directors of the Board, along with the Compensation Committee, evaluate the CEO’s performance and determine his compensation; |
Director Diversity and Core Competencies
| • | the independent directors of the Board meet in executive sessions without management present and have the opportunity to discuss the effectiveness of the Company’s management, including the CEO, the quality of Board meetings and any other issues and concerns; and |
Director Diversity and Core Competencies
| • | the Governance and Nominating Committee has oversight of succession planning, both planned and emergency, and the Board has approved an emergency CEO succession process. |
Director Diversity and Core Competencies
The Board believes that its leadership structure assists the Board’s role in risk oversight. See the discussion on the “Board’s Role in Risk Oversight” below. Non-Executive Chairman of the Board. The Non-Executive Chairman of the Board position is held by Mr. Botta, an independent director. The Board has appointed an independent Non-Executive Chairman of the Board to provide independent leadership to the Board. The Non-Executive Chairman of the Board role allows the Board to operate independently of management with the Non-Executive Chairman of the Board providing an independent leadership contact to the other directors. The responsibilities of the Non-Executive Chairman of the Board are set out in a Non-Executive Chairman of the Board Charter. These responsibilities include the following:
Director Diversity and Core Competencies
| • | preside at all meetings of the Board, including executive sessions of the independent directors; |
Director Diversity and Core Competencies
| • | call meetings of the Board and meetings of the independent directors, as may be determined in the discretion of the Non-Executive Chairman of the Board; |
Director Diversity and Core Competencies
| • | work with the CEO and the Corporate Secretary to prepare the schedule of Board meetings to assure that the directors have sufficient time to discuss all agenda items; |
Director Diversity and Core Competencies
| • | prepare the Board agendas in coordination with the CEO and the Corporate Secretary; |
Director Diversity and Core Competencies
| • | advise the CEO of any matters that the Non-Executive Chairman of the Board determines should be included in any Board meeting agenda; |
Director Diversity and Core Competencies
| 22 | CHENIERE |
Director Diversity and Core Competencies
SHAREHOLDER OUTREACH—GOVERNANCE
Director Diversity and Core Competencies
| • | advise the CEO as to the quality, quantity, appropriateness and timeliness of the flow of information from the Company’s management to the Board; |
Director Diversity and Core Competencies
| • | recommend to the Board the retention of consultants who report directly to the Board; |
Director Diversity and Core Competencies
| • | act as principal liaison between the directors and the CEO; |
Director Diversity and Core Competencies
| • | at the discretion of the Non-Executive Chairman of the Board, participate in meetings of the committees of the Board; |
Director Diversity and Core Competencies
| • | in the absence of the CEO or as requested by the Board, act as the spokesperson for the Company; and |
Director Diversity and Core Competencies
| • | be available, if requested, for consultation and direct communication with major shareholders of the Company. |
Director Diversity and Core Competencies
Board’s Role in Risk Oversight. Risks that could affect the Company are an integral part of Board and committee deliberations throughout the year. The Board has oversight responsibility for assessing the primary risks (including liquidity, credit, operations, ESG and regulatory compliance) facing the Company, the relative magnitude of these risks and management’s plan for mitigating these risks. In addition to the Board’s oversight responsibility, the committees of the Board consider the risks within their areas of responsibility. The Board and its committees receive regular reports directly from members of management who are responsible for managing particular risks within the Company. The Audit Committee discusses with management the Company’s major financial and risk exposures and the steps management has taken to mitigate such exposures, including the Company’s risk assessment and risk management policies. The Audit Committee also monitors the effectiveness of the Company’s internal control over financial reporting, legal and regulatory compliance and cybersecurity risk management and confers with our independent registered public accounting firm on the results of its processes to assess risk in the context of its audit engagement. The Governance and Nominating Committee reviews with management the current and emerging environmental, sustainability and social responsibility issues impacting the Company. The Compensation Committee oversees the management of risks relating to our compensation plans and arrangements, including assessments of the relationship among the Company’s risk management policies and practices, corporate strategy and compensation policies and practices. For a discussion of the Compensation Committee’s risk oversight, please see “Review of Compensation Risk” on page 31 of this Proxy Statement. The Board and its committees regularly discuss the risks related to the Company’s business strategy at their meetings. For more information on cybersecurity risk oversight, please see Item 1C. “Cybersecurity” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. SHAREHOLDER OUTREACH—GOVERNANCE The Company proactively engages with shareholders on governance topics as a matter of strategic priority, and the continuous evolution of our governance framework is a product of the Board’s responsiveness to shareholder input. Ahead of our 2023 Annual Meeting, members of our Board and senior management led engagements with shareholders representing more than 50% of our outstanding common stock through in-person, video and telephonic meetings, with governance topics being a priority in these engagements. Following our 2023 Annual Meeting, members of our Board and senior management engaged with shareholders holding more than 50% of our outstanding common stock. We intend to continue our proactive and constructive shareholder engagement efforts going forward and to consider any and all shareholder input with respect to our governance framework. Key outcomes and developments since the 2023 Annual Meeting include:
Director Diversity and Core Competencies
| • | In response to shareholder feedback and as part of our ongoing efforts to enhance our external reporting for shareholders, we are committed to further enhancing our disclosures around our climate and sustainability initiatives. |
Director Diversity and Core Competencies
| • | As part of our ongoing commitment to the refreshment of our Board, Denise Gray was elected to the Board, following the departure of Vicky Bailey who had served as a member of the Board since 2006. |
Director Diversity and Core Competencies
The Board believes that its current system of corporate governance oversight enables the directors to prioritize the long-term interests of the Company and our shareholders and be prudent stewards of shareholder capital. In addition, the Board is responsive to evolution in the general corporate governance environment.
Director Diversity and Core Competencies
| 2024 PROXY STATEMENT | 23 |
Human Capital Management
| • | Competitive compensation and benefits package and offerings to support wellness and mental health |
Human Capital Management
| • | Annual performance reviews and regular talent reviews to target development strategies and manage succession plans |
Health and Safety
| • | Safety target included in the compensation scorecard which is tied to the annual incentive program for all employees |
Human Rights and Labor Standards
| • | review, at least annually, non-employee director compensation for service on the Board and Board committees, including Non-Executive Chairman compensation and committee chairmen compensation, and recommend any changes to the Board; |
Human Rights and Labor Standards
| • | review and recommend to the Board for approval on an annual basis the compensation of the other executive officers of the Company, including salary, bonus and equity compensation, based on the Compensation Committee’s evaluations; |
Human Rights and Labor Standards
| • | in determining the long-term incentive component of the CEO’s compensation, the Compensation Committee shall consider such criteria as the Compensation Committee deems appropriate, including the Company’s performance and relative shareholder return, the value of similar incentive awards granted to CEOs at peer group companies, and the long-term incentive awards granted to the CEO in past years; |
Human Rights and Labor Standards
| • | review and recommend to the Board for approval any employment agreements, severance arrangements, change-in-control arrangements or special or supplemental employee benefits, and any material amendments to the foregoing, applicable to executive officers, provided that any awards granted under an equity-based inducement plan shall be approved by the Compensation Committee; |
Human Rights and Labor Standards
| • | grant awards under the stock plans or delegate that responsibility to the Equity Grant Committee, a committee of the Board or, subject to Delaware General Corporation Law, officers of the Company, provided that any awards granted under an equity-based inducement plan shall be approved by the Compensation Committee; |
Human Rights and Labor Standards
REVIEW OF COMPENSATION RISK The Compensation Committee considered the risks associated with our compensation policies and practices in 2023. The Compensation Committee concluded that our compensation policies and practices were not reasonably likely to have a material adverse effect on the Company and did not encourage our employees, including our executive officers, to take excessive risks in order to receive larger awards. As part of this analysis, the Compensation Committee considered the individual components of our executive officers’ compensation, the performance measures required to be achieved to earn cash bonus and equity awards and the vesting schedule of the equity awards. In concluding that our incentive plans do not promote excessive risk, the Compensation Committee considered the following factors, among others:
Human Rights and Labor Standards
| • | A significant portion of our executive officers’ compensation is tied to developmental, operating and corporate performance goals, and the achievement of the performance goals is conducted in accordance with the Company’s risk framework approved by the Board. |
Human Rights and Labor Standards
| • | Our compensation program design provides a mix of annual and longer-term incentives and performance measures. |
Human Rights and Labor Standards
| • | Our compensation mix is not overly weighted toward annual incentives. |
Human Rights and Labor Standards
| • | We do not maintain excessively leveraged payout curves for incentive compensation opportunities, nor do we maintain steep payout cliffs at certain performance levels that may encourage short-term business decisions to meet payout thresholds. |
Human Rights and Labor Standards
| • | We currently do not grant stock options. |
Human Rights and Labor Standards
| • | The Compensation Committee has discretion over incentive award payouts, and compliance and ethical behavior are integral factors considered in all performance assessments. |
Human Rights and Labor Standards
DIRECTOR COMPENSATION DIRECTOR COMPENSATION Our Corporate Governance Guidelines provide for compensation for our directors’ services, in recognition of their time and skills. Directors who are also our officers or employees do not receive additional compensation for serving on the Board. Maintaining a market-based compensation program for our directors enables the Company to attract qualified members to serve on the Board. The Governance and Nominating Committee, with the assistance of our independent compensation consultant, periodically reviews our director compensation levels and practices and compares them to that of comparable companies to ensure they are aligned with market practices. Specifically, comparisons are made to the companies included in our peer group used for benchmarking the compensation of our executive officers, which is discussed under “Peer Group” below. Based on the results of such competitive reviews, the Governance and Nominating Committee may recommend changes to our director compensation program to the Board for approval. The Board did not increase annual director compensation in 2023. Mr. Fusco did not receive any compensation for his service as a director. Directors may elect to receive the annual compensation either (i) 100% in restricted stock or (ii) $100,000 in cash and $195,000 in restricted stock. Additional compensation is paid for Board leadership positions, to recognize the additional time required to perform the responsibilities associated with these positions. These additional fees are as follows, which may be received either (i) 100% in restricted stock or (ii) 50% in cash and 50% in restricted stock: $30,000 for the Chair of the Audit Committee; $20,000 for the Chair of the Compensation Committee; $10,000 for the Chair of the Governance and Nominating Committee; and $185,000 for the Non-Executive Chairman. Cash payments are made quarterly. The directors’ restricted stock equity retainer of $195,000 and 50% of all Chair fees awarded in 2023 vest on the earlier of: (i) the day immediately prior to the date of the Company’s regular annual meeting of shareholders in the calendar year following the calendar year in which the date of the grant occurs; and (ii) the first anniversary of the date of grant. If a director elects to receive their $100,000 non-equity retainer and 50% cash portion of their committee chair fees (collectively, the “remaining compensation”) in restricted stock in lieu of cash, such restricted stock vests quarterly. Should a director resign, their remaining pro-rated compensation is paid in cash upon such resignation as if a 100% cash election had been made for their remaining compensation. Notwithstanding the foregoing, if a director resigns (i) upon the request of the Board, including as a result of Board refreshment or retirement initiatives, or (ii) in the case of a director designated to serve on the Board on behalf of a Company shareholder, upon the removal or replacement by, or upon the request of, such shareholder, and in each case where the director has not engaged in action that would result in removal for Cause (as defined in the director’s grant agreement), such director would receive a pro-rata amount of the restricted stock portion of their annual compensation based on the number of days of service relative to the applicable vesting period. Additionally, pursuant to a Director Deferred Compensation Plan approved in February 2022, non-employee directors may elect to defer receipt of 100% of their annual equity-based director compensation in a given director year (from annual meeting to annual meeting) into the form of deferred stock units (“DSUs”), which follow the same vesting schedule as the restricted stock the director would have otherwise received. The Governance and Nominating Committee continues to evaluate our total director compensation package to ensure competitiveness with market practices, as well as fairness and appropriateness in light of the responsibilities and obligations of our non-employee directors.
Human Rights and Labor Standards
| NON-EMPLOYEE DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2023 | | | | | | | | | NAME | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS ($)(1) | OPTION AWARDS ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($) | ALL OTHER COMPENSATION ($) | TOTAL ($) | | Vicky A. Bailey(2) | $50,000 | $— | — | — | — | — | $50,000 | | G. Andrea Botta(3) | $197,500 | $292,530 | — | — | — | — | $490,030 | | Patricia K. Collawn(4) | $— | $295,176 | — | — | — | — | $295,176 | | Brian E. Edwards(5) | $100,000 | $195,069 | — | — | — | — | $295,069 | | Denise Gray(6) | $— | $295,176 | — | — | — | — | $295,176 | | Lorraine Mitchelmore(7) | $— | $295,176 | — | — | — | — | $295,176 | | Scott Peak(8) | $— | $— | — | — | — | — | $— | | Donald A. Robillard, Jr.(9) | $— | $325,164 | — | — | — | — | $325,164 | | Matthew Runkle(10) | $— | $— | — | — | — | — | $— | | Neal A. Shear(11) | $— | $315,168 | — | — | — | — | $315,168 |
Human Rights and Labor Standards
| (2) Ms. Bailey did not stand for re-election at the 2023 Annual Meeting. As of December 31, 2023, she had no shares of restricted stock or deferred stock units outstanding. |
Human Rights and Labor Standards
| (3) Mr. Botta was granted 1,990 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $292,530. Mr. Botta receives $185,000 for his service as Non-Executive Chairman of the Board of Directors and $10,000 for his service as Chairman of the Governance and Nominating Committee. As of December 31, 2023, he had outstanding 0 shares of restricted stock and 1,990 deferred stock units. |
Human Rights and Labor Standards
| (4) Ms. Collawn was granted 2,008 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $295,176. As of December 31, 2023, she had outstanding 0 shares of restricted stock and 1,667 deferred stock units. |
Human Rights and Labor Standards
| (5) Mr. Edwards was granted 1,327 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $195,069. As of December 31, 2023, he had outstanding 1,327 shares of restricted stock and 0 deferred stock units. |
Human Rights and Labor Standards
| (6) Ms. Gray was granted 2,008 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $295,176. As of December 31, 2023, she had outstanding 0 shares of restricted stock and 1,667 deferred stock units. |
Human Rights and Labor Standards
| (7) Ms. Mitchelmore was granted 2,008 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $295,176. As of December 31, 2023, she had outstanding 1,667 shares of restricted stock and 0 deferred stock units. |
Human Rights and Labor Standards
| (9) Mr. Robillard was granted 2,212 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $325,164. Mr. Robillard receives $30,000 for his service as Chairman of the Audit Committee, paid in the form of restricted stock. As of December 31, 2023, he had outstanding 1,821 shares of restricted stock and 0 deferred stock units. |
Human Rights and Labor Standards
| (11) Mr. Shear was granted 2,144 shares of restricted stock or deferred stock units on May 11, 2023, with a grant date fair value of $315,168. Mr. Shear receives $20,000 for his service as Chairman of the Compensation Committee, paid in the form of restricted stock. As of December 31, 2022, he had outstanding 1,769 shares of restricted stock and 0 deferred stock units. |
EQUITY COMPENSATION
EQUITY COMPENSATION
PLAN INFORMATION
| (1) The number in this column represents the number of shares issuable under outstanding Restricted Stock Unit awards (“RSUs”) and Performance Stock Unit awards (“PSUs”) based on the maximum award level. For more information regarding these awards, please see “LTI Program” on page 50 of this Proxy Statement. The following awards have been granted under the Plan and remain outstanding as of December 31, 2023: 1,846,244 shares underlying RSUs, 1,643,463 shares underlying PSUs based on the maximum award level, and 17,044 shares of restricted stock and deferred stock units. |
PLAN INFORMATION
| (2) In May 2020, the Company established the Plan. The Plan is a broad-based incentive plan which allows for the issuance of stock options, stock appreciation rights and awards of bonus stock, phantom stock, restricted stock, restricted stock units and performance awards and other stock-based awards to employees, consultants and non-employee directors. The term of any award under the Plan may not exceed a period of ten years. |
PLAN INFORMATION
| Vesting of restricted stock under the Plan depends on whether the restricted stock was granted as a retention award or annual director equity award. Vesting of retention awards typically occurs in equal annual installments over a two-year period or three-year period on each anniversary of the grant date. The outstanding annual director equity retainer awards and 50% of all Chair fees vest on the earlier of: (i) the day immediately prior to the date of the Company’s next annual meeting of shareholders after the date of grant and (ii) the first anniversary of the date of grant. If a director elects to receive their remaining compensation in restricted stock in lieu of cash, such stock vests quarterly. |
PLAN INFORMATION
| RSUs under the Plan generally vest in equal annual installments over a three-year period on each anniversary of the grant date or cliff vest upon the third anniversary of the grant date. |
PLAN INFORMATION
| PSUs under the Plan cliff vest upon the third anniversary of the grant date, subject to the satisfaction of performance conditions. |
Liquefaction Projects Underpinned by Long-Term Contracts
Liquefaction Projects Underpinned by Long-Term Contracts Our long-term customer agreements form the foundation of our business and provide us with significant, stable, long-term cash flows. We have contracted substantially all of our anticipated production capacity under SPAs, in which our customers are generally required to pay a fixed fee with respect to the contracted volumes irrespective of their election to cancel or suspend deliveries of LNG cargoes, and under IPM agreements, in which the gas producer sells natural gas to us on a global LNG or natural gas index price, less a fixed liquefaction fee, shipping and other costs. Through our SPAs and IPM agreements, we have contracted approximately 95% of the total anticipated production from the Liquefaction Projects through the mid-2030s with approximately 16 years of weighted average remaining life as of December 31, 2023, excluding volumes from contracts with terms less than 10 years and volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation. For the volumes not contracted by our project level subsidiaries, we have an integrated marketing function that has access to the excess LNG available from the Liquefaction Projects, and has, and continues to develop, a portfolio of long-, medium- and short-term SPAs. Our management team creates value for our shareholders through diligent development (including commercialization), construction and operation of these facilities, the achievement of ambitious key milestones and disciplined capital allocation. The Compensation Committee considers progress against these goals when it designs Cheniere’s executive compensation program for our NEOs.
Liquefaction Projects Underpinned by Long-Term Contracts
| 2024 PROXY STATEMENT | 41 |
Liquefaction Projects Underpinned by Long-Term Contracts
2023 PERFORMANCE AND STRATEGIC ACCOMPLISHMENTS 2023 was another exceptional year for our company, further reinforcing the power of the Cheniere platform. Throughout the year, we continued to achieve significant milestones across the organization, including financially, operationally and commercially:
Liquefaction Projects Underpinned by Long-Term Contracts
| EXCEPTIONAL FINANCIAL RESULTS Record Net Income of $9.9 billion Exceeded midpoints of original Full Year 2023 Consolidated Adjusted EBITDA & Distributable Cash Flow guidance ranges by >$500 million each Out-earned our 9-train run-rate Consolidated Adjusted EBITDA & Distributable Cash Flow guidance for the 2nd year in a row | EXECUTION OF LONG-TERM CAPITAL ALLOCATION PLAN ~$5 billion deployed under “20/20 Vision” capital allocation plan Investment grade credit ratings achieved across the Cheniere complex Repaid ~$1.2 billion of long-term indebtedness & issued inaugural investment grade bond at Cheniere Partners Funded ~$1.5 billion of capex towards financially disciplined growth at CCL Stage 3 Project Repurchased ~9.5 million shares for ~$1.5 billion 10% increase to quarterly dividend in Q3 consistent with annual target, with $1.66/share of dividends declared for 2023 | BEST IN CLASS SAFETY & SEAMLESS LNG OPERATIONS Top decile safety record with Total Reportable Incident Rate (TRIR) of 0.10 Exported 637 cargoes & produced ~2,300 tbtu, representing ~11% of global LNG produced in 2023 >94% utilization rate in 2023 vs. ~89% global average(1) Continued to support global call for reliable, flexible LNG supply with ~73% of our volume delivered to Europe Signed long-term contracts representing >119 million tonnes of aggregate volumes between 2026-2050 in support of the SPL Expansion Project | PREMIER LNG DEVELOPMENT CCL Stage 3 Project ahead of schedule and 51.4%(2) complete at year-end, with first LNG from the first train expected in 2024 Submitted applications to FERC & DOE for the CCL Midscale Trains 8 & 9 Project Initiated permitting process for the SPL Expansion Project, inclusive of CCS at SPL |
Liquefaction Projects Underpinned by Long-Term Contracts
| * For a definition of Consolidated Adjusted EBITDA and Distributable Cash Flow and a reconciliation of these non-GAAP measures to net income (loss), the most directly comparable GAAP financial measure, please see Appendix D. |
Liquefaction Projects Underpinned by Long-Term Contracts
| 1 | Global utilization average in 2022 per International Gas Union. Cheniere utilization reflects 2023 feed gas processed / production capacity. |
Liquefaction Projects Underpinned by Long-Term Contracts
| 2 | CCL Stage 3 Project completion percentage as of December 31, 2023 and reflects: engineering 83.7% complete, procurement 72.2% complete, subcontract work 66.9% complete and construction 11.1% complete. |
Strategic Accomplishments: Adding to our Foundation for Growth and Cash Flow Stability
| • | Signed significant new long-term contracts: During 2023, we signed approximately 6.5 mtpa of long-term contracts, which included: |
Strategic Accomplishments: Adding to our Foundation for Growth and Cash Flow Stability
| • | long-term LNG SPAs with Foran Energy Group Co. Ltd., BASF, ENN LNG (Singapore) Pte. Ltd., Equinor ASA and Korea Southern Power Co. Ltd. with estimated volumes totaling approximately 106 million tonnes of LNG and expected deliveries between 2026 and 2050. Approximately 65 million tonnes is subject to Cheniere Partners making a positive FID on the first or second trains of the SPL Expansion Project, as applicable, or Cheniere unilaterally waiving that requirement. |
Financial
| • | During 2023, we accomplished the following pursuant to our long-term capital allocation priorities: |
Financial
| • | We prepaid approximately $1.2 billion of consolidated long-term indebtedness. |
Recognition
| • | Majority of incentive awards earned based on performance |
Recognition
| • | Non-employee director equity compensation limits |
Recognition
| • | Minimum vesting schedule for long-term incentive awards of at least 12 months, subject to limited exceptions |
Recognition
| • | Annually review the independence of the compensation consultant retained by the Compensation Committee |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | Annual cash bonus incentive metrics are tied to specific financial, operating, safety, ESG and strategic goals. We believe close alignment between our compensation goals and our business strategy is critical to driving performance to be measured against our key milestones and metrics. |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | Significant long-term compensation is linked to financial performance and growth metrics. We believe our executive officers’ compensation should be closely linked to the creation of value for our shareholders over the long run. As such, the majority of their compensation is and should be at risk and directly tied to corporate outperformance over longer time horizons. In addition to the long-term performance risk, our executive officers are also subject to continued employment requirements for the vesting of their long-term compensation. |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | The annual incentive plan generated an above-target payout for our NEOs based upon the Company’s 2023 performance across multiple financial, operating, safety, ESG and strategic metrics. |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | Performance share units awarded in 2021 also generated an above-target payout for our NEOs based upon the Company’s performance across the performance metrics of cumulative Distributable Cash Flow per share and Absolute Total Shareholder Return over the 2021-2023 period. |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | In February 2023, the Board approved our 2023 annual performance scorecard which continued to emphasize safety and ESG metrics and milestones, illustrating our Company-wide commitment to these important issues, as well as financial and operational discipline. |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
ANNUAL INCENTIVE PROGRAM The Board and the Compensation Committee are committed to a pay-for-performance compensation structure that aligns our executive compensation with the key drivers of long-term growth and creation of shareholder value. We believe that close alignment between our compensation goals and our business strategy is critical to driving performance to be measured against our key metrics and objectives. Consistent with our compensation philosophy and in response to feedback from our shareholders, the Compensation Committee utilizes a scorecard approach to determining annual cash bonuses. The following key features are included in the scorecard:
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | Individual bonus targets based on competitive benchmarks; |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| • | Quantitative performance goals in the following areas of performance: financial, budget management, safety and operational effectiveness; |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
Target Incentive Opportunities. The Compensation Committee reviews the target annual incentive opportunities for each of our NEOs annually, and may adjust the targets based on competitive positioning, internal parity, or other relevant factors. For 2023, the Compensation Committee approved individual annual incentive targets which are reflected in the table below titled “NEOs Annual Incentive Award for 2023.” Performance Goals. The 2023 scorecard provided that 45% of the bonus opportunity was determined based on performance measures using multiple financial, budget management and operational effectiveness measures, and 55% was determined based upon achievement of strategic goals and ESG accomplishments, including safety, because the Compensation Committee believes that each of those areas is a key driver of the Company’s annual performance and, ultimately, long-term success. For 2023, the Compensation Committee set the target performance goals in November 2022, with the exception of the Adjusted EBITDA target and other revisions which were approved in February 2023. As a result of anticipated international gas price curves and proactive selling of open capacity, the Consolidated Adjusted EBITDA target was increased by approximately 35% as compared to 2022. As 2023 marked the first full year of operations for all nine large-scale Trains, the target for asset production was increased by approximately 4% from 2022, after accounting for major turnarounds at the SPL Project, with an associated approximately 3% increase in Adjusted O&M expense despite national inflation trends. After reaching FID in 2022 for the CCL Stage 3 Project, for 2023 our goal focused on execution of project development. We also continued to emphasize our commitment to a culture of compliance with laws and regulations as well as a top-tier safety achievement with respective dedicated scorecard metrics. Process for Measuring Performance. Performance below the “threshold” level results in no payout earned for the applicable performance goal. If performance falls between the “threshold” and “target” or “target” and “stretch” levels, then the achievement level under the scorecard is determined using straight line interpolation. Once the achievement level under the scorecard is calculated based on actual performance as compared to the goals set forth above, the Compensation Committee has the discretion to reduce or increase the payouts to the extent it determined appropriate to reflect each NEO’s performance during the year.
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| Actual payout | = | Base salaryx | Target bonus (%)x | Performance score (%) | +/- | Individual performance adjustment (if any) |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
2023 Performance Results. The scorecard table below shows the level of achievement in 2023 for each of the performance goals and the resulting weighted percentage of target that was earned as a result of 2023 performance. The scorecard reflects the Company’s noteworthy performance in 2023, achieving above the target level in almost all of the performance measures. We increased our financial guidance throughout 2023, and Adjusted EBITDA results were at the high end of the final guidance range while we exceeded the high end of the final guidance for 2023 for Distributable Cash Flow, mainly attributed to higher margins on open capacity and optimization upstream and downstream of the SPL Project and CCL Project. Operationally, we successfully executed our first major maintenance turnaround at the SPL Project within the scheduled timeline and with zero recordables and zero lost time injuries, enabling us to achieve a total recordable incident rate of only 0.10. Strategically, we advanced the Stage 3 total project progress ahead of schedule to reach 51% complete as of December 31, 2023, filed with the FERC and the DOE for the CCL Midscale Trains 8 & 9 Project and initiated the pre-filing review progress with the FERC for the SPL Expansion Project. We also signed approximately 6.5 mtpa of long term contracts that are expected to support the SPL Expansion Project. From an ESG perspective, we continued to progress our Life Cycle Assessment emission strategy and our DEI initiatives, as well as our regulatory and compliance goals. Overall, the Company’s achievements in 2023 resulted in a total weighted average under the scorecard of 167% of target, as shown below:
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| METRIC | THRESHOLD (50% OF TARGET) | TARGET | STRETCH (200% OF TARGET) | WEIGHT | 2023 ACTUAL | % ACHIEVEMENT | | Scorecard EBITDA ($ millions): | $7,500 | $8,250 | $9,000 | | $8,910 | | | • Scorecard EBITDA, excl. commodity margin ($ millions)(2) | $3,700 | $3,950 | $4,100 | 25% | $4,202 | 200% | | • Commodity margin ($ millions) | $3,800 | $4,300 | $4,900 | 5% | $4,708 | 168% | | Budget Management: | | | | | | | | • Adjusted SG&A Expense(1) ($ millions) | $250 | $228 | $216 | 5% | $217 | 198% | | Operational Effectiveness (excluding commissioning): | | | | | | | | • Asset Production (TBtu) | 2,248 | 2,314 | 2,332 | 10% | 2,299 | 89% | | • Adjusted O&M Expense(1) ($ millions) | $1,624 | $1,488 | $1,413 | 10% | $1,517 | 89% | | Strategic: | | | | | | | | • Stage 3 total project progress | 35% | 40% | 44% | 5% | 51% | 200% | | • Expansion and Growth | Provide to Board expansion implementation strategy | File with FERC for a growth project | Progress development of 10+ Mtpa of growth projects | 5% | | 200% | | • Advance commercialization for further expansions | Subject to Compensation Committee Discretion | | | 5% | | 200% | | ESG: | | | | | | | | Environmental | | | | | | | | • Climate Business Development (CCUS, Renewables, etc.) | Provide climate Business Development strategy to Board | Identify to Board and pursue partnership, project development and/or transaction | Enter into partnership, transaction and/or commencement of permitting for project | 5% | | 100% | | • Emissions Strategy (Life Cycle Assessment) | Update LCA model and supplier portals | Provide to Board potential emissions target implementation strategy | Provide to Board potential emissions target | 5% | | 200% | | Social | | | | | | | | • Safety (TRIR)(3) | 50th percentile (Second quartile of peer group) 0.58 | Top quartile 0.28 | Lower of 15th percentile and 3-year Cheniere average 0.16 | 10% | 0.10 | 200% | | • Progress DEI Initiatives | Subject to Compensation Committee Discretion | | | 5% | | 125% | | Governance | | | | | | | | • Regulatory / Compliance | Subject to Compensation Committee Discretion | | | 5% | | 200% | | Weighted Average | | | | | | 167% |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| (2) In approving the scorecard results, the Committee determined to use Scorecard EBITDA which excludes from Consolidated Adjusted EBITDA $138 million of incremental cash settlement expenses related to certain long term incentive awards granted to officers of the Company who are required to file reports with the SEC pursuant to Section 16 of the Exchange Act. For a definition of Consolidated Adjusted EBITDA and a reconciliation to net income, the most directly comparable GAAP financial measure, please see Appendix D. |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
Based in part on the recommendations of Mr. Fusco, the Compensation Committee approved and recommended to the Board for approval the final annual incentive award payouts for each of the NEOs other than Mr. Fusco. The Compensation Committee approved and recommended to the Board for approval the final annual incentive award payout to Mr. Fusco. In evaluating our NEOs’ performance during 2023, the Compensation Committee considered each NEO’s specific contribution to our Company’s key achievements, including those discussed under “Compensation Discussion and Analysis—2023 Performance and Developments” and towards achieving the quantitative and strategic measures in the scorecard. Based on 2023 Company and individual performance results, the Compensation Committee recommended and the Board approved annual incentive awards to the NEOs for 2023 as follows:
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
| NEOs Annual Incentive Award for 2023 | | | | | | | NAMED EXECUTIVE | TITLE | TARGET ANNUAL INCENTIVE (% OF BASE SALARY) | TARGET ANNUAL INCENTIVE | SCORECARD DETERMINED ANNUAL INCENTIVE (167% OF TARGET) | EARNED ANNUAL INCENTIVE | | Jack A. Fusco | Director, President and Chief Executive Officer | 150% | $2,400,000 | $4,008,000 | $4,008,000 | | Zach Davis | Executive Vice President and Chief Financial Officer | 100% | $725,000 | $1,210,750 | $1,452,900 | | Anatol Feygin | Executive Vice President and Chief Commercial Officer | 100% | $700,000 | $1,169,000 | $1,169,000 | | Corey Grindal | Executive Vice President and Chief Operating Officer | 100% | $900,000 | $1,503,000 | $1,503,000 | | Sean N. Markowitz | Executive Vice President, Chief Legal Officer and Corporate Secretary | 100% | $700,000 | $1,169,000 | $1,169,000 |
SHAREHOLDER ENGAGEMENT AND SAY-ON-PAY
Under the terms of the Annual Incentive Program, determination of an individual’s annual incentive award is based on scorecard results and individual performance. Individual performance is not a weighted factor in our plan but evaluation of individual performance may result in an adjustment to payout for an individual executive. For 2023, Mr. Davis received an increased earned annual incentive equal to 120% of his scorecard-determined bonus, in connection with the Company’s outstanding financial achievements in 2023, including the advancement of multiple key strategic goals under the Company’s capital allocation program announced in 2022. LONG-TERM INCENTIVE AWARDS LTI program awards accomplish several important objectives: (i) they motivate sustained performance against our long-term objectives; (ii) they align executives with shareholder interests by rewarding long-term value creation; and (iii) they help retain employees who are in high demand elsewhere.
LTI Program
LTI Program The Compensation Committee believes that the LTI program delivers a consistent, competitive and conventional approach to delivering long-term incentives. Equity grants align our NEOs’ interests with the interests of shareholders by rewarding sustained long-term value creation and enable us to attract and retain highly qualified individuals for important positions throughout the Company. We have incorporated Absolute Total Shareholder Return (“ATSR”) as an additional metric under the LTI program for PSU grants since 2019, believing that this feature further aligns our LTI program with that of our peers. The ATSR metric and the cumulative distributable cash flow (“DCF”) metric require important absolute performance achievements, despite favorable or unfavorable market conditions, to earn the awarded long-term incentives.
LTI Program
| 50 | CHENIERE |
LTI Program
The key attributes in the Company’s NEO LTI program are described below:
LTI Program
| • Grants will be made on an annual basis with a minimum of a 1-year vesting period | | • Grants will consist of a mix of at least 50% PSUs for executive officers with the remainder consisting of RSUs • PSUs: 3-year cliff vesting (performance and service-based) • RSUs: 3-year ratable vesting (service-based) • The 2023 and 2024 LTI Awards to executive officers were a mix of 50% PSUs and 50% RSUs | | • PSUs will include one or more performance metrics, with the actual number of shares earned to be between 0% and 300%, providing for a cap on payouts • PSUs will vest upon certification by the Compensation Committee of the level of achievement of the performance conditions during the performance period • The outstanding LTI Awards to executive officers included two performance metrics (cumulative DCF per share and ATSR) | | • Equity award grants to executives will include clawback provisions |
2023 LTI Awards
2023 LTI Awards In February 2023, the Compensation Committee recommended and the Board approved long-term incentive awards as part of the Company’s LTI program for each of the named executive officers of the Company.
2023 LTI Awards
| 2023 LTI Awards | | | | | | | NAME | TITLE | TARGET VALUE (% OF BASE SALARY) | TARGET DOLLAR VALUE | RSUs | TARGET PSUs | | Jack A. Fusco | Director, President and Chief Executive Officer | 977% | $15,630,000 | 51,012 | 51,012 | | Zach Davis | Executive Vice President and Chief Financial Officer | 500% | $3,625,000 | 11,831 | 11,831 | | Anatol Feygin | Executive Vice President and Chief Commercial Officer | 500% | $3,500,000 | 11,423 | 11,423 | | Corey Grindal | Executive Vice President and Chief Operating Officer | 500% | $4,500,000 | 14,687 | 14,687 | | Sean N. Markowitz | Executive Vice President, Chief Legal Officer and Corporate Secretary | 500% | $3,500,000 | 11,423 | 11,423 |
2023 LTI Awards
The target values for Mr. Fusco’s 2023 long-term incentive awards increased from a target of 933% of his base salary in 2022 to 977% of his base salary in 2023 as a result of the evaluation of competitive market data. Key Terms of the RSUs and PSUs under the 2023 LTI Awards The RSU awards vest in three equal installments. One third of the RSU awards vested on February 9, 2024, and one third will vest on each of February 9, 2025 and February 9, 2026. Each PSU award is expressed in terms of a target number of shares. The actual number of shares earned under the PSUs, between 0% and 300% of the target, will be determined based on the Company’s cumulative DCF per share and ATSR from January 1, 2023 through December 31, 2026 compared to pre-established performance targets. For a definition of DCF per share and ATSR in connection with the 2023 PSU awards, please see Appendix B. The PSU awards will vest upon certification by the Compensation Committee of the level of achievement of the performance conditions during the performance period, as illustrated below. The PSU award agreement provides for the settlement in cash of vested PSUs with a fair market value of $3,000,000 or less, with any remaining value above $3,000,000 to be settled in shares of the Company’s common stock or cash, at the discretion of the Compensation Committee. The RSU award agreement provides discretion to the Compensation Committee to grant recipients the opportunity to elect to receive all or a portion of the vested RSUs in cash rather than shares.
2023 LTI Awards
| 2024 PROXY STATEMENT | 51 |
2023 LTI Awards
In 2023, we increased the targets for our cumulative DCF per share metric by approximately 36% compared to the previous year as a result of the anticipated production from nine trains for three full-years operation in 2023, 2024 and 2025. We assumed 95% of budget as our Target goal and 106% of budget as our Stretch goal. Vesting is also subject to continued employment, with exceptions in some cases, including for a change-in-control or termination due to death or disability or retirement. Upon a “Change in Control” or a termination by the Company without “Cause” or by the award recipient for “Good Reason”, in each instance as defined in the PSU agreement and RSU agreement or the 2020 Plan, the RSU and PSU awards will be treated in accordance with the Severance Plan (as described below). Upon a termination due to death or disability, all of the RSUs and the target number of PSUs will vest in full immediately. Upon retirement, the RSU and PSU awards will be treated in accordance with the Cheniere Energy, Inc. Retirement Policy (as described below). Each vested RSU and PSU will be settled for one share of the Company’s common stock or cash, as applicable and described herein. PSU agreements also contain clawback provisions that apply during the recipient’s employment with the Company and for one year following termination of employment, and remain subject to the Cheniere Energy, Inc. Clawback Policy (as described below). ATSR Modifier The ATSR modifier for PSU awards granted in 2022 and thereafter acts as a multiplier on earned DCF PSUs (up to +/-50%), as follows:
2023 LTI Awards
| ATSR% (annual) | ATSR Modifier* | | 15% or higher | 1.50x | | 10% | 1.25x | | 5% to -5% | 1.0x | | -10% | 0.75x | | -15% or lower | 0.50x |
2023 LTI Awards
| * Results between goal levels would be interpolated |
PSU Vesting and Performance Achievement (2021-2023 Awards)
PSU Vesting and Performance Achievement (2021-2023 Awards) The PSU awards granted in 2021, which relied on the performance metrics of cumulative DCF and ATSR, resulted in a 300% payout that vested in February 2024. In November 2023, the Board provided an election form to the Company’s NEOs to elect to settle all or a portion of their 2021 PSU award in cash; provided that the Company had sufficient liquidity at the time the awards were settled to do so. This optional change in settlement method was previously approved by the Compensation Committee and the Board in order to provide liquidity to NEOs while limiting dilution from equity grants, consistent with the Company’s share repurchase program under its long-term capital allocation plan. The overall achievement for the 2021 PSU awards was determined as follows: Cumulative Distributable Cash Flow DCF for the 2021-2023 period totaled $71.38 / share, which resulted in a 200% achievement on the DCF metric.
PSU Vesting and Performance Achievement (2021-2023 Awards)
| | Threshold (50%) | Target (100%) | Stretch (200%) | Actual | | 2021-2023 DCF | $18.93 /share | $21.56 /share | $22.66 /share | $71.38 / share |
PSU Vesting and Performance Achievement (2021-2023 Awards)
ATSR Modifier The ATSR modifier acts as a multiplier on earned DCF PSUs (up to +/-50%), as follows, for PSU awards granted in 2021:
PSU Vesting and Performance Achievement (2021-2023 Awards)
| ATSR% (annual) | ATSR Modifier* | | 15% or higher | 1.50x | | 10% | 1.25x | | 5% to 0% | 1.0x | | -15% or lower | 0.50x |
PSU Vesting and Performance Achievement (2021-2023 Awards)
| * Results between goal levels would be interpolated |
PSU Vesting and Performance Achievement (2021-2023 Awards)
| 52 | CHENIERE |
PSU Vesting and Performance Achievement (2021-2023 Awards)
ATSR for the 2021-2023 period, determined in accordance with the table above, resulted in a 46.9% annualized return, well above the threshold for a 1.50x modifier.
PSU Vesting and Performance Achievement (2021-2023 Awards)
| 45-day Average Share Price at Start | 45-day Average Share Price at End of Period | Share Price Return of Reinvested Dividends | 45-day Average Share Price at End of Period + Dividend Return | Change Over Period | Annualized Return (Compounded) | ATSR Factor Interpolated | | $55.78 | $172.85 | $3.92 | $176.77 | 216.9% | 46.9% | 1.50 |
RSU Cash Settlement
RSU Cash Settlement In November 2023, the Company and each officer of the Company who is required to file reports with the SEC pursuant to Section 16 of the Exchange Act, other than the Executive Vice President and Chief Commercial Officer and the Senior Vice President and Chief Accounting Officer (the “Electing Officers”), agreed to settle all of the restricted stock units held by the Electing Officer that were scheduled to vest in February 2024 in cash. Such cash settlement was conditioned on the Company having sufficient liquidity at the time the awards were settled and was limited to the extent necessary so that, immediately after giving effect to such settlement, each Electing Officer would own shares of the Company’s common stock with a value equal to at least two times the amount required to remain in compliance with the Company’s stock ownership guidelines as applied by the Board to such Electing Officer.
2024 LTI Awards
2024 LTI Awards In February 2024, the Compensation Committee recommended and the Board approved long-term incentive awards as part of the Company’s LTI program for each of the executive officers of the Company.
2024 LTI Awards
| 2024 LTI Awards | | | | | | | NAME | TITLE | TARGET VALUE (% OF BASE SALARY) | TARGET DOLLAR VALUE | RSUs | TARGET PSUs | | Jack A. Fusco | Director, President and Chief Executive Officer | 1000% | $17,000,000 | 50,677 | 50,677 | | Zach Davis | Executive Vice President and Chief Financial Officer | 500% | $4,000,000 | 11,924 | 11,924 | | Anatol Feygin | Executive Vice President and Chief Commercial Officer | 500% | $3,750,000 | 11,179 | 11,179 | | Corey Grindal | Executive Vice President and Chief Operating Officer | 500% | $4,750,000 | 14,160 | 14,160 | | Sean N. Markowitz | Executive Vice President, Chief Legal Officer and Corporate Secretary | 500% | $3,750,000 | 11,179 | 11,179 |
2024 LTI Awards
The number of RSUs and target PSUs awarded to Mr. Fusco increased from a target of 977% of his base salary in 2023 to 1,000% of his base salary in 2024 as a result of an analysis of peer group compensation in order to ensure market effectiveness. COMPENSATORY ARRANGEMENTS
Compensatory Arrangement with President and CEO
Compensatory Arrangement with President and CEO In connection with the appointment of Jack A. Fusco as President and CEO, the Company and Mr. Fusco entered into an employment agreement dated as of May 12, 2016, as amended on August 15, 2019 and August 11, 2021. Our employment agreement with Mr. Fusco provides for an annual base salary of $1,250,000, subject to increase at the discretion of the Compensation Committee. The Compensation Committee reviews Mr. Fusco’s base salary on an annual basis, in light of our peer group and various factors including competitive market data and the performance of the Company and Mr. Fusco. As a result, in February 2024 the Compensation Committee recommended an increase to Mr. Fusco’s annual base salary to $1,700,000 from $1,600,000 in 2023. Upon a termination of Mr. Fusco’s employment by the Company without cause, or by Mr. Fusco for good reason, Mr. Fusco will be entitled to receive, subject to his execution of a release of claims, (i) a cash severance payment equal to the sum of two times (or, if the termination of employment is within 12 months following a change-in-control, three times) the sum of Mr. Fusco’s annual base salary and annual target bonus; (ii) a pro-rata annual bonus for the year of termination based on actual performance of the
Benefits
| • | The Cheniere Retirement Plan is a tax-qualified 401(k) savings plan pursuant to which we match 100% up to the lesser of 6% of salary and bonus deferrals or the maximum deferrals permitted by law. |
Benefits
| • | In addition, employees are covered by short-term and long-term disability, basic life insurance equal to two times base salary and voluntary life (elective) insurance and accidental death and dismemberment insurance. |
Termination and Change-in-Control Benefits
Termination and Change-in-Control Benefits The Company maintains a Key Executive Severance Pay Plan, as amended and restated (the “Severance Plan”), that has been reviewed and approved by the Compensation Committee and Board, and a Retirement Policy, as amended and restated (the “Retirement Policy”), to provide certain severance and retirement benefit protections, including those associated with a change-in-control.
Termination and Change-in-Control Benefits
| 54 | CHENIERE |
Severance Plan
Severance Plan The Severance Plan is intended to provide severance compensation benefits to the executive officers and other officers of the Company and its affiliates in the event of the termination of their employment under certain circumstances. Under the Severance Plan, our officers, including our CEO and other executive officers, are eligible for certain post-employment compensation and benefits, which vary depending upon whether a change-in-control or termination of employment occurs. The Severance Plan also provides certain compensation and benefits in the event of a change-in-control of the Company. To the extent of any overlap, severance benefits for which an officer may be eligible to receive under any employment agreement, and any amounts to which the officer would be eligible to receive under the Severance Plan would be reduced so that no officer receives duplicative benefits. Please see “Potential Payments Upon Termination or Change-in-Control” on page 66 for additional information, and “Compensatory Arrangement with President and CEO” on page 53 of this Proxy Statement for details regarding the severance entitlements set forth in our CEO’s employment agreement. Severance and Benefits in Connection with a Change-in-Control. With respect to each executive officer, upon the occurrence of a change-in-control, even absent a termination of employment, generally notwithstanding the provisions of any other benefit plan or agreement, and subject to certain conditions outlined in the Severance Plan:
Severance Plan
| • | all of the executive officer’s outstanding unvested equity awards, equity-based awards, annual awards and retention awards (collectively, “Incentive Awards”) which are time-based will automatically vest in full as of the date of the change-in-control; |
Severance Plan
| • | the executive officer’s outstanding unvested performance-based Incentive Awards that vest based on performance metrics other than total shareholder return (“TSR”) will vest as of the date of the change-in-control at the greater of (i) target level for such Incentive Award and (ii) actual performance for such Incentive Awards, determined by shortening the performance period to end on the date of the change-in-control, adjusting applicable performance metrics as necessary and appropriate, and determining level of achievement for such metrics based on the shortened period; and |
Severance Plan
| • | the executive officer’s outstanding unvested performance-based Incentive Awards that vest based on TSR will vest as of the date of the change-in-control based on actual TSR as of the date of the change-in-control. |
Severance Plan
In the event that an executive officer’s employment is terminated within three months prior to or 24 months following a change-in-control and upon the occurrence of the executive’s termination of employment by us without cause, or by such executive for good reason, then such officer is entitled to receive, in addition to, but not duplicative of, benefits resulting from a pre-termination change-in-control, and subject to certain conditions outlined in the Severance Plan:
Severance Plan
| • | a lump sum payment within 60 days following termination in an amount equal to three times (in the case of the CEO) or two times (in the case of other executive officers) the sum of (a) the officer’s annual base salary in effect when the termination occurs and (b) the officer’s target annual cash bonus for the year of termination; plus |
Severance Plan
| • | a lump sum payment within 60 days following termination in an amount equal to the officer’s pro-rated target annual cash bonus for the year of termination; plus |
Severance Plan
| • | the officer’s unpaid annual cash bonus, if any, earned for the year prior to the year of termination; plus |
Severance Plan
| • | acceleration of vesting of all of the executive officer’s outstanding unvested time-based Incentive Awards; and the executive officer’s outstanding unvested performance-based Incentive Awards (a) that vest based on TSR will vest based on actual TSR as of the date of the change-in-control and (b) that vest based on performance metrics other than TSR will vest at the greater of (i) target level for such Incentive Award and (ii) actual performance for such Incentive Awards, determined by shortening the performance period to end on the date of the qualifying termination, adjusting applicable performance metrics as necessary and appropriate, and determining level of achievement for such metrics based on the shortened period. |
Severance Plan
Severance and Benefits Not in Connection with a Change-in-Control. In the event that an executive officer’s employment is terminated by the officer for good reason or by us without cause, and not in connection with a change-in-control, as described above, then such officer is entitled to receive, subject to certain conditions outlined in the Severance Plan:
Severance Plan
| • | a lump sum payment within 60 days following termination in an amount equal to two times (in the case of the CEO) or 1.5 times (in the case of other executive officers) the sum of (a) the officer’s annual base salary in effect when the termination occurs and (b) the officer’s target annual cash bonus for the year of termination; plus |
Severance Plan
| • | a lump sum payment within 60 days following termination in an amount equal to the officer’s pro-rated target annual cash bonus for the year of termination; plus |
Severance Plan
| • | the officer’s unpaid annual cash bonus, if any, earned for the year prior to the year of termination; plus |
Severance Plan
| 2024 PROXY STATEMENT | 55 |
Severance Plan
| • | acceleration of vesting of the executive officer’s outstanding unvested time-based Incentive Awards (in the case of the CEO, which were granted more than six months prior to the termination, with all other unvested time-based Incentive Awards forfeited); and |
Severance Plan
| • | vesting of a pro-rated portion of the executive officer’s outstanding unvested performance-based Incentive Awards (in the case of the CEO, which were granted more than six months prior to the termination, with all other unvested performance-based Incentive Awards forfeited) based on actual performance levels achieved at the end of the applicable performance period. |
Severance Plan
Provisions Applicable Whether or Not Termination is in Connection with a Change-in-Control. In addition to the above, for a period of 24 months following the termination date, subject to certain conditions outlined in the Severance Plan, the executive officer will receive continued subsidized health care benefits, to be provided concurrently with any health care benefit required under COBRA. At the discretion of the Company, the executive officers also may receive outplacement benefits at our expense. As a condition to receiving benefits under the Severance Plan, participants will be subject to certain conditions, including entering into non-competition, non-solicitation, non-disclosure, non-disparagement and release agreements with us. If any amounts will become subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or otherwise non-deductible under Section 280G of the Code, then such amounts will be reduced so as not to become subject to such excise tax, but only if the net amount of such payments as so reduced is greater than or equal to the net amount of such payments without such reduction. If any participant is a “specified employee” under Section 409A of the Code, any compensation or benefits to be paid or received under the Severance Plan as a result of termination of employment and that constitute “non-qualified deferred compensation” will be delayed in accordance with the Code.
Retirement Policy
Retirement Policy The Retirement Policy is limited to employees located in the United States. The Retirement Policy is not applicable in the United Kingdom or any jurisdictions in which it would be a violation of applicable laws. The Retirement Policy also does not apply to the Company’s Chief Executive Officer. Under the Retirement Policy, an employee is eligible for a “Qualifying Retirement” upon resigning from the Company if he or she is at least 60 years old, has at least four years of service with the Company or its affiliates (or a combination of both), with a combined sum of the age and full years of service with the Company or its affiliates (or a combination of both) equal to at least 72 years and circumstances constituting “cause” do not exist. Following an eligible employee’s Qualifying Retirement, the continuous employment requirement for all of such employee’s long-term incentive awards granted prior to the Effective Date will be waived, and all such awards will continue to vest in accordance with their terms. In addition, for awards granted under the Company’s LTI program after the Effective Date, following a Qualifying Retirement, an employee’s outstanding unvested time-based incentive awards will immediately vest, and the employee’s outstanding unvested performance-based incentive awards will vest pro-rata, based on the whole number of months served by the employee in the performance period (or, if longer, service vesting period) prior to his or her retirement, on the normal schedule applicable to such awards and based on actual performance results at the end of the relevant period. Only such time-based incentive awards and performance-based incentive awards granted at least six months prior to the Qualifying Retirement will be eligible under the Retirement Policy. The determination of whether an employee satisfies the criteria for a Qualifying Retirement will be determined by the Company in its sole discretion. The Retirement Policy will not apply to new hire awards, special retention awards, other awards not part of any annual long-term incentive compensation program or awards under any annual cash bonus program, except as otherwise determined by the Company on a case-by-case basis. The treatment of an employee’s outstanding awards under the Retirement Policy as described above is subject to the employee’s execution of a release of claims against the Company and compliance with restrictive covenants as set forth in the Retirement Policy. EXECUTIVE COMPENSATION PROCESS The Compensation Committee, with the support of an independent compensation consultant and management, handles the development and implementation of our executive compensation program. The Compensation Committee makes recommendations to the Board regarding our executive officers’ compensation for the Board’s final approval.
Retirement Policy
| • | Establishing performance goals for long-term and short-term incentive awards for executive officers. |
Retirement Policy
| • | Evaluating the achievement of annual developmental, operating and corporate goals for the year to determine the total amount of the bonus pool for the annual incentive awards and evaluating the achievement of our executive officers. |
Retirement Policy
| • | Reviewing, discussing and modifying, as appropriate, recommendations from the CEO on the base salaries and annual incentive awards for our executive officers. The Compensation Committee makes its recommendations for the Board’s final approval. |
Retirement Policy
| • | Reviewing and recommending to the Board for approval long-term incentive awards for the CEO and executive officers. |
Retirement Policy
| • | Evaluating the achievement of performance goals under long-term incentive awards. |
Retirement Policy
| • | At the end of the year, the CEO proposes base salaries and annual cash bonus awards for our executive officers (other than the CEO) to the Compensation Committee which then reviews, discusses and modifies, as appropriate, these recommendations. |
Retirement Policy
PEER GROUP Each year, the Compensation Committee, with the assistance of management and our independent compensation consultant, reviews external market data to determine the competitiveness of the total compensation package of our executive officers. The market data includes information representative of the energy industry within which we operate and also includes compensation information from a diversified list of U.S. companies of comparable size. The Compensation Committee reviews the following components of each executive officer’s compensation relative to the amount paid to executives in similar positions within the market data: base salaries, annual cash bonuses and long-term incentive awards. The market data serves as a point of reference for measuring the compensation of each of our executive officers, but individual compensation decisions are made based on a combination of considerations, including the Company’s overall performance; the individual roles, responsibilities and performance of each of our executive officers and market competitiveness. The Compensation Committee does not adhere to a rigid benchmarking process in setting compensation and does not target any specific market level; rather, information is used as a market reference for the Compensation Committee.
Peer Group
Peer Group With assistance from management and our compensation consultant, the Compensation Committee reviews our executive officers’ compensation against both nationally recognized published survey data, as well as proxy data from our peer group. As the first mover in domestic LNG production and marketing, we reference a peer group with broad representation across the oil and gas industry as the best available set of compensation benchmarks for comparable energy executive roles. The peer group focuses on companies of comparable size, primarily in terms of enterprise value and assets. The Compensation Committee reviews the composition of our peer group annually and may make changes as it deems appropriate. Following its annual review in late 2022, the Compensation Committee determined that no changes to the peer group were warranted. For external comparisons, the Compensation Committee referenced the following peer group in determining compensation for 2023:
Peer Group
| • Air Products and Chemicals, Inc. | • Marathon Petroleum Corporation | | • Baker Hughes Company | • Occidental Petroleum Corporation | | • ConocoPhillips | • ONEOK, Inc. | | • Enterprise Products Partners L.P. | • Phillips 66 | | • EOG Resources, Inc. | • Suncor Energy Inc. | | • Halliburton Company | • Targa Resources Corp. | | • Hess Corporation | • Valero Energy Corporation | | • Kinder Morgan, Inc. | • The Williams Company | | • LyondellBasell Industries N.V. | |
Peer Group
Our consolidated enterprise value as of the end of 2023 places us between the 75th and 100th percentiles of this peer group. The Compensation Committee, in conjunction with Meridian, reviewed our peer group in late 2023 and determined that the peer group continues to offer a robust and appropriate data set for benchmarking and that no changes were necessary.
Peer Group
| 58 | CHENIERE |
Peer Group
OTHER CONSIDERATIONS OTHER CONSIDERATIONS STOCK OWNERSHIP GUIDELINES Our Board believes that significant stock ownership by our executive officers and directors strengthens their alignment with shareholders and demonstrates their commitment to the Company. In February 2021, the Board approved increases to the minimum required ownership levels for our executive management team, as shown below.
Peer Group
| Stock Ownership Guidelines for Non-Employee Directors and Executive Officers | | | POSITION | CURRENT GUIDELINES | | Non-Employee Directors | 3x the director’s prevailing annual equity retainer award | | President and CEO | 6x base salary | | Executive Vice Presidents | 4x base salary | | Senior Vice Presidents | 3x base salary |
Peer Group
All non-employee directors and executive officers are expected to be in full compliance with the guidelines within five years of initial appointment to a position subject to the guidelines, with certain ownership thresholds that must be met in the interim period. If a non-employee director or executive officer is not in compliance with the guidelines, he or she is required to retain the entire after-tax value of Company stock received upon the vesting of stock awards and the exercise of stock options until the interim threshold requirements or compliance with the guidelines is achieved. The Board recognizes that there may be occasions in which the guidelines place a severe hardship on the individual and has delegated discretion to the Governance and Nominating Committee to determine whether an exemption should be granted to the individual in such instances. All of our non-employee directors and executive officers are in compliance with the guidelines, and many of them maintain holdings of Cheniere common stock significantly in excess of the minimum required amount of shares. RECOUPMENT OF COMPENSATION Effective November 16, 2023, Cheniere implemented the Cheniere Energy, Inc. Clawback Policy, which was amended on February 5, 2024 in connection with Cheniere’s transfer of its stock exchange listing from the NYSE American to the NYSE (the “Clawback Policy”). The Clawback Policy complies with SEC rules and the New York Stock Exchange Listed Company Manual, which mandate the recovery of certain erroneously paid performance-based incentive compensation that may be received on or after October 2, 2023, during the three completed fiscal years immediately prior to the fiscal year in which Cheniere has a qualifying financial restatement, provided the recipient of such performance-based compensation had begun serving as a Section 16 officer of the Company prior to receiving such compensation and was serving as a Section 16 officer at any time during the applicable performance period, subject to limited exceptions. We have included clawback provisions in our equity awards since 2017 and intend to continue to include clawback provisions in future equity awards to executives. Mr. Fusco’s employment agreement provides that he will be subject to and will abide by any policy the Company adopts regarding the clawback of incentive compensation and any additional clawback provisions as required by law and applicable listing rules. TAX AND ACCOUNTING CONSIDERATIONS In designing our compensation programs, we take into account the various tax, accounting and disclosure rules associated with various forms of compensation. We also review and consider the deductibility of executive compensation under Section 162(m) of the Code and design our compensation programs with the intent that they comply with Section 409A of the Code where applicable. Section 162(m) of the Code generally limits the amount of compensation that may be deducted per covered employee to $1 million per taxable year. We generally seek to preserve tax deductions for executive compensation but recognize that it may be beneficial to grant compensation that is not fully tax deductible when we believe it is in the best interests of the Company and our shareholders.
Peer Group
| 2024 PROXY STATEMENT | 59 |
COMPENSATION COMMITTEE REPORT
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($)(1) | BONUS ($)(2) | STOCK AWARDS ($)(3) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(4) | ALL OTHER COMPENSATION ($)(5) | TOTAL ($) | | Jack A. Fusco President and CEO | 2023 | $1,580,769 | $— | $15,955,533 | $4,008,000 | $20,772 | $21,565,074 | | | 2022 | $1,500,000 | $— | $16,585,377 | $4,500,000 | $23,013 | $22,608,390 | | | 2021 | $1,500,000 | $500 | $12,608,398 | $3,960,000 | $22,186 | $18,091,084 | | Zach Davis EVP and CFO | 2023 | $710,577 | $1,000 | $3,700,500 | $1,452,900 | $21,421 | $5,886,398 | | | 2022 | $640,385 | $— | $3,850,359 | $1,482,000 | $23,210 | $5,995,954 | | | 2021 | $580,769 | $— | $5,212,710 | $1,056,000 | $21,868 | $6,871,347 | | Anatol Feygin EVP and Chief Commercial Officer | 2023 | $692,308 | $— | $3,572,886 | $1,169,000 | $20,772 | $5,454,966 | | | 2022 | $660,000 | $— | $3,909,505 | $1,504,800 | $22,860 | $6,097,165 | | | 2021 | $660,000 | $— | $3,368,348 | $1,161,600 | $22,186 | $5,212,134 | | Corey Grindal EVP and Chief Operating Officer | 2023 | $861,538 | $1,000 | $4,593,800 | $1,503,000 | $21,421 | $6,980,759 | | Sean N. Markowitz EVP, Chief Legal Officer and Corporate Secretary | 2023 | $695,192 | $— | $3,572,886 | $1,169,000 | $20,772 | $5,457,850 | | | 2022 | $670,192 | $— | $3,998,479 | $1,539,000 | $22,860 | $6,230,531 | | | 2021 | $640,385 | $— | $3,317,342 | $1,144,000 | $22,186 | $5,123,913 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table contains information about our NEOs’ outstanding equity awards at December 31, 2023. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | STOCK AWARDS | | | | | NAME AND GRANT DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(1) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)(2) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(3) | | Jack A. Fusco | | | | | | 2021 LTI Award (02/11/2021) | 27,933(4) | $4,768,442 | 83,799 | $42,915,982 | | 2022 LTI Award (02/10/2022) | 43,371(4) | $7,403,863 | 65,056 | $33,317,129 | | 2023 LTI Award (02/09/2023) | 51,012(4) | $8,708,259 | 51,012 | $26,124,776 | | Zach Davis | | | | | | 2021 LTI Award (02/11/2021) | 5,587(4) | $953,757 | 16,760 | $8,583,299 | | 2021 LTI Award (08/27/2021) | 10,000(4) | $1,707,100 | | | | 2022 LTI Award (02/10/2022) | 10,069(4) | $1,718,879 | 15,103 | $7,734,699 | | 2023 LTI Award (02/09/2023) | 11,831(4) | $2,019,670 | 11,831 | $6,059,010 | | Anatol Feygin | | | | | | 2021 LTI Award (02/11/2021) | 7,463(4) | $1,274,009 | 22,387 | $11,465,054 | | 2022 LTI Award (02/10/2022) | 10,224(4) | $1,745,339 | 15,335 | $7,853,514 | | 2023 LTI Award (02/09/2023) | 11,423(4) | $1,950,020 | 11,423 | $5,850,061 | | Corey Grindal | | | | | | 2021 LTI Award (02/11/2021) | 7,015(4) | $1,197,531 | 21,044 | $10,777,264 | | 2022 LTI Award (02/10/2022) | 10,843(4) | $1,851,009 | 16,264 | $8,329,282 | | 2022 LTI Award (02/10/2022) | 12,392(4) | $2,115,438 | | | | 2023 LTI Award (02/09/2023) | 14,687(4) | $2,507,218 | 14,687 | $7,521,653 | | Sean N. Markowitz | | | | | | 2021 LTI Award (02/11/2021) | 7,350(4) | $1,254,719 | 22,048 | $11,291,442 | | 2022 LTI Award (02/10/2022) | 10,456(4) | $1,784,944 | 15,684 | $8,032,247 | | 2023 LTI Award (02/09/2023) | 11,423(4) | $1,950,020 | 11,423 | $5,850,061 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (1) The values represented in this column have been calculated by multiplying $170.71, the closing price of our common stock on December 29, 2023, by the number of unvested shares of restricted stock and RSUs. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (2) The amounts in this column are the target amount of PSUs granted as part of the annual LTI program. The 2021 awards have a performance period of January 1, 2021 to December 31, 2023; the 2022 awards have a performance period of January 1, 2022 to December 31, 2024; and the 2023 awards have a performance period of January 1, 2023 to December 31, 2025. PSU awards will vest upon certification by the Compensation Committee of the level of achievement of the performance conditions during the performance measurement period. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (3) The values represented in this column have been calculated by multiplying $170.71, the closing price of our common stock on December 29, 2023, by the maximum number of shares that could be earned under the PSUs in accordance with Item of 402(f) of Regulation S-K. This estimated payout is not necessarily indicative of the actual payout at the end of the performance period. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (4) Awards vest ratably over three years from the date of grant. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| 64 | CHENIERE |
OPTION EXERCISES AND
OPTION EXERCISES AND
STOCK VESTED
STOCK VESTED The following table sets forth the number of shares that vested from RSUs and PSUs and the aggregate dollar value realized upon the vesting of such RSUs and PSUs for our NEOs in 2023. There were no option exercises by our NEOs in 2023. OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2023
STOCK VESTED
| | OPTION AWARDS | | STOCK AWARDS | | | NAME | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | VALUE REALIZED ON EXERCISE ($) | NUMBER OF SHARES ACQUIRED ON VESTING (#)(1) | VALUE REALIZED ON VESTING ($)(2) | | Jack A. Fusco | — | — | 335,615 | $50,171,555 | | Zach Davis | — | — | 54,464 | $8,332,778 | | Anatol Feygin | — | — | 88,977 | $13,301,099 | | Corey Grindal | — | — | 76,440 | $11,687,944 | | Sean N. Markowitz | — | — | 82,034 | $12,263,693 |
STOCK VESTED
| (1) Included in this column are the vesting of RSUs and PSUs as well as the following vested RSUs and PSUs that were settled in cash: for Mr. Fusco, 335,615; for Mr. Davis, 25,579; for Mr. Feygin, 88,977; for Mr. Grindal, 24,080; and for Mr. Markowitz, 82,034. |
STOCK VESTED
| (2) The value in this column for the NEOs’ RSUs and PSUs that vested during 2023 has been calculated, for any RSUs or PSUs settled in stock, by multiplying the per share fair market value of the underlying shares on the vesting date by the number of shares that vested, and for any PSUs settled in cash, the actual cash payment made, which was determined by multiplying the 45 trading day average preceding vesting by the number of shares that vested. |
STOCK VESTED
| 2024 PROXY STATEMENT | 65 |
POTENTIAL PAYMENTS UPON
POTENTIAL PAYMENTS UPON
CHANGE-IN-CONTROL
| JACK A. FUSCO(1) EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | TERMINATION FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON | TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE FOR GOOD REASON | DEATH/ DISABILITY(2) | IMMEDIATELY UPON CHANGE-IN-CONTROL | TERMINATION WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE WITH GOOD REASON, IN CONNECTION WITH CHANGE- IN-CONTROL(3) | | Cash Compensation | | $8,000,000 | | | $12,000,000 | | Prorated Target Bonus | | $2,400,000 | | | $2,400,000 | | Health and Welfare Benefits | | 55,179 | | | 55,179 | | Long-Term Incentives (by Grant Date): | | | | | | | 02/11/2021 Restricted Stock Units | | $4,768,442 | $4,768,442 | $4,768,442 | | | 02/11/2021 Performance Stock Units | | $42,915,982 | $14,305,327 | $42,915,982 | | | 02/10/2022 Restricted Stock Units | | $7,403,863 | $7,403,863 | $7,403,863 | | | 02/10/2022 Performance Stock Units | | $22,211,420 | $11,105,710 | $33,317,129 | | | 02/09/2023 Restricted Stock Units | | $8,708,259 | $8,708,259 | $8,708,259 | | | 02/09/2023 Performance Stock Units | | $8,708,259 | $8,708,259 | $26,124,776 | | | Total | $— | $105,171,403 | $54,999,860 | $123,238,451 | $14,455,179 |
CHANGE-IN-CONTROL
| ZACH DAVIS EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | TERMINATION FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON | TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE FOR GOOD REASON | DEATH/ DISABILITY(2) | IMMEDIATELY UPON CHANGE-IN-CONTROL | TERMINATION WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE WITH GOOD REASON, IN CONNECTION WITH CHANGE- IN-CONTROL(3) | | Cash Compensation | — | $2,175,000 | — | — | $2,900,000 | | Prorated Target Bonus | — | $725,000 | — | — | $725,000 | | Health and Welfare Benefits | — | $55,179 | — | — | $55,179 | | Long-Term Incentives (by Grant Date): | | | | | | | 02/11/2021 Restricted Stock Units | — | $953,757 | $953,757 | $953,757 | — | | 02/11/2021 Performance Stock Units | — | $8,583,299 | $2,861,100 | $8,583,299 | — | | 08/27/2021 Restricted Stock Units | — | $1,707,100 | $1,707,100 | $1,707,100 | — | | 02/10/2022 Restricted Stock Units | — | $1,718,879 | $1,718,879 | $1,718,879 | — | | 02/10/2022 Performance Stock Units | — | $5,156,466 | $2,578,233 | $7,734,699 | — | | 02/09/2023 Restricted Stock Units | — | $2,019,670 | $2,019,670 | $2,019,670 | — | | 02/09/2023 Performance Stock Units | — | $2,019,670 | $2,019,670 | $6,059,010 | — | | Total | $— | $25,114,020 | $13,858,409 | $28,776,414 | $3,680,179 |
CHANGE-IN-CONTROL
| ANATOL FEYGIN EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | TERMINATION FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON | TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE FOR GOOD REASON | DEATH/ DISABILITY(2) | IMMEDIATELY UPON CHANGE-IN-CONTROL | TERMINATION WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE WITH GOOD REASON, IN CONNECTION WITH CHANGE- IN-CONTROL(3) | | Cash Compensation | — | $2,100,000 | — | — | $2,800,000 | | Prorated Target Bonus | — | $700,000 | — | — | $700,000 | | Health and Welfare Benefits | — | $55,179 | — | — | $55,179 | | Long-Term Incentives (by Grant Date): | | | | | | | 02/11/2021 Restricted Stock Units | — | $1,274,009 | $1,274,009 | $1,274,009 | — | | 02/11/2021 Performance Stock Units | — | $11,465,054 | $3,821,685 | $11,465,054 | — | | 02/10/2022 Restricted Stock Units | — | $1,745,339 | $1,745,339 | $1,745,339 | — | | 02/10/2022 Performance Stock Units | — | $5,235,676 | $2,617,838 | $7,853,514 | — | | 02/09/2023 Restricted Stock Units | — | $1,950,020 | $1,950,020 | $1,950,020 | — | | 02/09/2023 Performance Stock Units | — | $1,950,020 | $1,950,020 | $5,850,061 | — | | Total | $— | $26,475,298 | $13,358,911 | $30,137,997 | $3,555,179 |
CHANGE-IN-CONTROL
| Corey Grindal EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | TERMINATION FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON | TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE FOR GOOD REASON | DEATH/ DISABILITY(2) | IMMEDIATELY UPON CHANGE-IN-CONTROL | TERMINATION WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE WITH GOOD REASON, IN CONNECTION WITH CHANGE- IN-CONTROL(3) | | Cash Compensation | — | $2,700,000 | — | — | $3,600,000 | | Prorated Target Bonus | — | $900,000 | — | — | $900,000 | | Health and Welfare Benefits | — | $55,179 | — | — | $55,179 | | Long-Term Incentives (by Grant Date): | | | | | | | 02/11/2021 Restricted Stock Units | — | $1,197,531 | $1,197,531 | $1,197,531 | — | | 02/11/2021 Performance Stock Units | — | $10,777,264 | $3,592,421 | $10,777,264 | — | | 02/10/2022 Restricted Stock Units | — | $1,851,009 | $1,851,009 | $1,851,009 | — | | 02/10/2022 Performance Stock Units | — | $5,552,855 | $2,776,427 | $8,329,282 | — | | 02/10/2022 Restricted Stock Units | — | $2,115,438 | $2,115,438 | $2,115,438 | — | | 02/09/2023 Restricted Stock Units | — | $2,507,218 | $2,507,218 | $2,507,218 | — | | 02/09/2023 Performance Stock Units | — | $2,507,218 | $2,507,218 | $7,521,653 | — | | Total | $— | $30,163,711 | $16,547,262 | $34,299,395 | $4,555,179 |
CHANGE-IN-CONTROL
| Sean N. Markowitz EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | TERMINATION FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON | TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE FOR GOOD REASON | DEATH/ DISABILITY(2) | IMMEDIATELY UPON CHANGE-IN-CONTROL | TERMINATION WITHOUT CAUSE OR RESIGNATION BY EXECUTIVE WITH GOOD REASON, IN CONNECTION WITH CHANGE- IN-CONTROL(3) | | Cash Compensation | — | $2,100,000 | — | — | $2,800,000 | | Prorated Target Bonus | — | $700,000 | — | — | $700,000 | | Health and Welfare Benefits | — | $55,179 | — | — | $55,179 | | Long-Term Incentives (by Grant Date): | | | | | | | 02/11/2021 Restricted Stock Units | — | $1,254,719 | $1,254,719 | $1,254,719 | — | | 02/11/2021 Performance Stock Units | — | $11,291,442 | $3,763,814 | $11,291,442 | — | | 02/10/2022 Restricted Stock Units | — | $1,784,944 | $1,784,944 | $1,784,944 | — | | 02/10/2022 Performance Stock Units | — | $5,354,831 | $2,677,416 | $8,032,247 | — | | 02/09/2023 Restricted Stock Units | — | $1,950,020 | $1,950,020 | $1,950,020 | — | | 02/09/2023 Performance Stock Units | — | $1,950,020 | $1,950,020 | $5,850,061 | — | | Total | $— | $26,441,156 | $13,380,933 | $30,163,433 | $3,555,179 |
CEO PAY RATIO
CEO PAY RATIO Set forth below is the annual total compensation of our median employee, the annual total compensation of Mr. Fusco and the ratio of those two values:
CEO PAY RATIO
| • | The 2023 annual total compensation of the median employee (other than our President and CEO) was $225,523; |
CEO PAY RATIO
| • | The 2023 annual total compensation of our President and CEO, Mr. Fusco, was $21,565,074; and |
CEO PAY RATIO
| • | For 2023, the ratio of the annual total compensation of Mr. Fusco to the median annual total compensation of all of our employees was reasonably estimated to be 95.6 to 1. |
CEO PAY RATIO
The ratio stated above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. To identify our median employee in 2023, we used our employee population as of December 31, 2023, including full-time, part-time and temporary employees. We excluded our employees in Singapore and China, as the employees located in these countries (9 and 3, respectively) represented fewer than 5% of our total employees. Our total employee count at that time was 1,607 prior to excluding Singapore and China and 1,595 after accounting for these exclusions. We annualized the base salary paid to permanent employees newly hired during 2023 and did not apply any cost-of-living adjustments in measuring compensation. As required by SEC rules, we calculated annual total compensation (including equity awards received in 2023 valued on the grant date) for both our median employee and Mr. Fusco using the same methodology that we use to determine our NEOs’ annual total compensation for the Summary Compensation Table.
CEO PAY RATIO
| 2024 PROXY STATEMENT | 71 |
CEO PAY RATIO
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and the Company’s financial performance. For further information concerning Cheniere’s pay for performance philosophy and how Cheniere aligns executive compensation with performance, see “Compensation Discussion and Analysis” beginning on page 40. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by our NEOs. TABULAR DISCLOSURE OF COMPENSATION ACTUALLY PAID VERSUS PERFORMANCE The following table discloses information on “compensation actually paid” (“CAP”) to our principal executive officer (“PEO”) and (on average) to our other NEOs (Non-PEO NEOs) during the specified years alongside our total shareholder return (“TSR”) and net income, as well as Consolidated Adjusted EBITDA, a Company-selected financial measure. The Company identified Consolidated Adjusted EBITDA as our Company-Selected Measure, given its prominence in our description of core operating performance through earnings releases and conference calls, as described in more detail beginning on page 42, as well as our belief that generation of Consolidated Adjusted EBITDA, along with efficient use of capital, will drive total shareholder return over time. Because the majority of our executives’ variable pay is delivered as equity-based awards that align the interests of our NEOs with the key drivers of long-term growth and creation of shareholder value, PEO and average other NEO CAP is correlated with changes in share price and/or ATSR over the applicable measurement periods, with Consolidated Adjusted EBITDA contributing to investor and other stakeholder assessment of sequential performance and operating trends of the Company. While the Company does not use Consolidated Adjusted EBITDA as an explicit performance measure in the overall executive compensation program, the measure of Consolidated Adjusted EBITDA is highly correlated and aligned with other performance measures used in the Company’s executive compensation program, including Scorecard EBITDA and Cumulative Distributable Cash Flow Per Share. As discussed in Compensation Discussion and Analysis—Components of our Executive Compensation Program, Scorecard EBITDA excludes from Consolidated Adjusted EBITDA incremental cash settlement expenses related to certain long term incentive awards granted to NEOs. We may determine a different financial performance measure to be the most important financial performance measure in future years. Consolidated Adjusted EBITDA is a non-GAAP financial measure. For a definition of Consolidated Adjusted EBITDA and a reconciliation of this non-GAAP measures to net income (loss), the most directly comparable GAAP financial measure, please see Appendix D.
CEO PAY RATIO
| | | | | | VALUE OF INITIAL FIXED $100 INVESTMENT BASED ON: | | | | | YEAR (a) | SUMMARY COMPENSATION TABLE TOTAL FOR PEO (1) (b) | CAP TO PEO (2) (c) | AVERAGE SUMMARY COMPENSATION TABLE TOTAL FOR NON-PEO NEOS (3) (d) | AVERAGE CAP TO NON-PEO NEOS (4) (e) | TOTAL CUMULATIVE SHAREHOLDER RETURN (5) (f) | PEER GROUP TOTAL CUMULATIVE SHAREHOLDER RETURN (6) (g) | NET INCOME (LOSS) (MILLIONS) (7) (h) | CONSOLIDATED ADJUSTED EBITDA (NON-GAAP) (MILLIONS) (8) (i) | | 2023 | $21,565,074 | $49,987,486 | $5,944,993 | $13,030,436 | $286 | $174 | $12,059 | $8,771 | | 2022 | $22,608,390 | $77,025,086 | $5,774,056 | $17,851,473 | $248 | $158 | $2,635 | $11,564 | | 2021 | $18,091,084 | $64,767,515 | $5,302,041 | $13,751,700 | $167 | $107 | $(1,565) | $4,867 | | 2020 | $14,893,339 | $13,083,721 | $4,922,878 | $2,827,851 | $98 | $74 | $501 | $3,961 |
CEO PAY RATIO
| (1) For 2023, 2022, 2021 and 2020, the PEO was Jack A. Fusco. |
CEO PAY RATIO
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Fusco, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Fusco during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Fusco’s total compensation for each year to determine the CAP: |
CEO PAY RATIO
| 72 | CHENIERE |
PEO SUMMARY COMPENSATION TABLE (“SCT”) TOTAL TO CAP RECONCILIATION
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the Non-PEO NEOs as a group during the applicable year, and in 2020 reflects the impact of certain award forfeitures in connection with the resignation of Michael Wortley, our previous Chief Financial Officer. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the Non-PEO NEOs as a group for each year to determine the CAP, using the same methodology described above in Note 2: |
NEO SCT TOTAL TO CAP RECONCILIATION
| • | SEC rules require that net income be presented as a performance measure in the pay versus performance table above. As the table illustrates, changes in CAP for our PEO and non-PEOs are not aligned with performance on net income as a financial performance measure. Our net income (loss) has historically been impacted by unrealized, non-cash derivative gains and losses on contracts accounted for as derivative instruments. Derivative instruments are reported at fair value on our consolidated financial statements. Because the recognition of derivative instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, use of derivative instruments may result in continued volatility of our net income based on changes in market pricing, counterparty credit risk and other relevant factors that may be outside of our control, notwithstanding the operational intent to mitigate risk exposure over time, in a manner which we believe is not necessarily reflective of the strength and financial performance of our business. |