Little-known CEO hits the pay jackpot

Cheniere Energy hasn't made an annual profit, but its boss still got $142 million last year. Exxon's got only $28 million.

By MSN Money Partner May 1, 2014 2:45PM
Charif Souki, chairman and chief executive officer of Cheniere Energy Inc.,
© F. Carter Smith/Bloomberg via Getty ImagesBy Daniel Gilbert, The Wall Street Journal

Cheniere Energy (LNG) rewarded its chief executive with one of the richest pay-packages in America last year -- even though it has yet to make an annual profit or reach its goal of exporting U.S. natural gas.

CEO Charif Souki (pictured), a little-known figure outside the energy industry, received compensation valued at $142 million in 2013, almost all of it in stock, according to a filing Monday with the U.S. Securities and Exchange Commission. Equilar Inc., a firm that tracks executive pay, said it was unaware of any company that paid its CEO more in 2013.


The Houston company hopes to be the first to liquefy and export natural gas from the U.S. shale boom.


Cheniere's stock price more than doubled in 2013, sending its market value up $6 billion, according to market data collector FactSet. Shares are up 28 percent so far this year, to $55.93, as the company has gotten necessary federal permits and moved closer to exporting gas. Its shares sold for less than $2 as recently as five years ago.


Today Cheniere has a stock-market value of $12.48 billion. It has lost money every year since its founding in 1996, according to Standard & Poor's Capital IQ.


The company estimates its contracts will bring in at least $2.3 billion a year by 2017. That is a big increase from 2013, when Cheniere reported $267 million in revenue and lost $507 million. It also raised $1.5 billion from an affiliate of Blackstone Group LP in 2012 in exchange for shares.


Mr. Souki's payday "would dwarf anyone I'm familiar with in the Fortune 50," said Alan Johnson, managing director at New York-based compensation consultant Johnson Associates. "Is he worth more than all the senior executives at Exxon (XOM) put together?"


By comparison, Exxon Mobil Corp., the largest U.S. energy company with a market capitalization 35 times as large as Cheniere, paid its top five executives combined compensation valued at $76 million last year, including $28 million to its CEO.


A spokeswoman for the company said that "Mr. Souki's compensation is primarily paid in shares and the value reflects the performance of our stock." He was unavailable for an interview, she said.


Mr. Souki's family members also have benefited from the company's rise, according to disclosures it provided on Monday. Karim Souki, the CEO's brother, receives almost $40,000 a month for providing consulting services to Cheniere as of this year, a 27 percent raise from 2013. Like Cheniere executives, Karim Souki receives annual bonuses, including $600,000 last year.


Tarek Souki, the CEO's son, is employed as a vice president by a Cheniere subsidiary and based in London, where he receives a car and living allowance. His base salary, paid in British pounds, was raised 3 percent to the equivalent of about $300,000.

Neither man could immediately be reached for comment.


More than a decade ago, Mr. Souki bet that the U.S. would run short of natural gas and positioned Cheniere to import the fuel. But after energy producers started coaxing vast amounts of natural gas from shale, he reversed course.


The company is poised to become the first U.S. firm to liquefy large amounts of natural gas and export it to countries not covered by U.S. free trade agreements, with plans to ship the chilled fuel by next year. It has signed 20-year contracts with energy companies from South Korea to Spain to sell the liquefied natural gas from a facility under construction in Louisiana, and plans to build a similar plant in Texas.


Mr. Souki has cashed in some of his stock, selling shares worth $55 million since 2012, according to a Wall Street Journal review of SEC disclosures.


He owns almost 3 percent of the company's shares; some of them are pledged as collateral, according to securities filings, but the company doesn't say how many or spell out the nature of the obligations.


Of his 2013 compensation, almost $133 million comes from stock awards, which are tied to meeting project milestones such as receiving the necessary permits, completing the liquefaction plants and maintaining a share price above a target threshold. Much of the stock has already vested, securities filings show.


Mr. Souki, 61 years old, received a package valued at $57.5 million in 2012.

Institutional Shareholder Services, an influential proxy advisory firm, flagged this potential payout as a concern, noting last year that Mr. Souki stood to reap as much as $189 million in 2013. Despite the company's stock performance, ISS in 2013 recommended that investors vote against the company's compensation plan, which got a relatively low 57 percent of shareholder votes cast.


"Repeated excessive grants that are linked to time or project milestones severely weaken the linkage between pay and performance," ISS wrote last year. The group hasn't yet published its analysis of this year's proxy.


Cheniere said in its securities filing that it is attuned to such concerns, noting that the company has been "actively engaging in dialogue with a significant number of investors to ensure that they benefit in tandem with the company and our executive officers." The firm hired a new compensation consultant in October.


More from The Wall Street Journal

Tags: LNGXOM
211Comments
May 1, 2014 3:26PM
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Only in America can a company lose money every year and increase in value.  Hey, at least he got junior and his brother cushy jobs at the company too.
May 1, 2014 4:52PM
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The Phantom "Recovery" ....

Our do-nothing, totally-out-of-touch double-speak elected officials are always claiming that the waters of the so-called 'economic recovery' of the last two or three years are 'raising all boats'. If any average person in this nation actually believes this pablum for even a minute then they are patently delusional.


In the past three years of the so-called 'recovery' fully 93% of all economic gains; salaries, personal wealth and assets, has gone to the top 1% of the population.That means that that 7% of the 'crumbs' on the ground that the wealthy do not YET own have to be divided by the other 312 Million average working Americans.


The obscenely bloated salaries, perks and privileges given to the Fortune 500 corporation presidents and CEOs are just the 'tip of the iceberg' with what is wrong in this country. Hearing about the corporate largesse bestowed upon this select group of conniving individuals just seems to foment more fear, anger, and total loss of faith among the teeming millions who toil each and every day just to keep a roof over their head and some food on the table for their kids.


The Wall Street 'casino boys', our 535 totally 'bought and paid for' crooks in Congress, the Fed, the big banks and the global corporations have simply gotten away with murder without ever pulling a trigger. This nation has gone down a rat hole of greed, avarice and distrust and I fear that it will be driven to the brink of a major civil insurrection if things continue to spiral down for the average citizen who is barely treading water. Peace to all ~ 

May 1, 2014 3:50PM
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This is crazy the shareholders get nothing and CEO runs away with the money..... This is today's business in America with the "Company Board members" rubber stamping anything the officers want.
May 1, 2014 3:53PM
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how much did mlb players for new york yankees make?  why do they need that much money?

 

why should fans subsidize ballplayers salaries with $6 hot dogs?

May 1, 2014 4:11PM
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That's just super. Yet another useless, do nothing, grossly overpaid fat boy in a suit.
May 1, 2014 4:50PM
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"Estimates" they will bring in 2.3 B in 4 years.  For now, they are LOSING HALF A BILLION a year and he gets a 142M compensation package in stock.  Makes sense to me.   The equities market is nothing but a ponzi scheme casino.
May 1, 2014 3:59PM
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Simply the "best and the brightest" proving once again that those words are nothing but opinion, and that real actionable rewards for real reasons  (crazy ones like making profit) is NOT what executive bonus taking is about!
May 1, 2014 4:40PM
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This guys family must be big time in texas, must be in charge of every county, and must own all of the mineral rights in the midland, tx area. This is ridiculous that anybody receives such compensation. Nobody is 142M/yr smart, nobody not even Einstein!
May 1, 2014 3:26PM
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So, what Mr. Souki really received was $9 million.  The rest is just paper and the role of the dice.  If the company is successful, he wins.  If it is not, nothing.   $9 million is a lot of money.  But, why does the Journal have to build this up to something which hasn't yet been realized.  And, even if or when realized make it out to be anything but successful business.
May 1, 2014 4:46PM
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I don't begrudge this guy his salary but my guess is he is in the same crowd of people who fight against raising the minimum wage, healthcare of all, you name it.  
May 1, 2014 4:54PM
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This has "Scam" written all over it.
May 1, 2014 5:18PM
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This is the reason why the compnay has not made a profit since its inception in 1996.

Pretty pathetic .

Nepotism ay its best.

May 1, 2014 5:31PM
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The key phrase in this article for me was Exporting America's Natural Gas.

We seem to blind to the fact that most companies have their eye on emerging markets and when they say they want to drilll or frac or whatever to make America energy independent they are in fact not being truthful.

Recently a Canadian official was asked if the Key Stone pipeline oil would be sold in the US and he refused to answer the question.

May 1, 2014 4:24PM
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Wasn't Enron also headquartered out of Houston, Texas?  Nothing changes--trust me--NOTHING.
May 1, 2014 5:07PM
May 1, 2014 4:28PM
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Clever how runaway Board Directors can take care of themselves at the expense of investors. Those are net profits they are rewarding themselves with.
May 1, 2014 4:29PM
May 1, 2014 4:46PM
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if people wouldn't buy it they would drop the prices but we all know u all just like to whine and do nothing bout it !!!
May 1, 2014 3:57PM
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when a ballteam loses the coaches and owners shouldnt get paid and neither should the ballplayers.

why should a company pay players to lose?

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