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Top-Paid U.S. CEO Emerges With $142 Million Pay Package

By Laura Marcinek, Caleb Melby and Zain Shauk
April 29, 2014 4:39 PM EDT 19 Comments
Charif Souki, chairman and chief executive officer of Cheniere Energy Inc., in Houston on March 6, 2013.
Photographer: F. Carter Smith/Bloomberg
Charif Souki, chairman and chief executive officer of Cheniere Energy Inc., in Houston on March 6, 2013.

Cheniere Energy (LNG) Inc.’s Charif Souki emerged as the highest paid U.S. executive in 2013, receiving $142 million and beating Gamco Investors (GBL) Inc.’s Mario Gabelli and Och-Ziff Capital (OZM) Management Group’s James Levin.

Souki’s compensation last year included a $133 million stock award that vests as his company hits certain financial and operational goals, according to a regulatory filing yesterday from the Houston-based natural-gas exporter, which has never posted an annual profit. He also received a $3.68 million cash bonus and a salary of $800,000, the filing shows.

The co-founder and chief executive officer of Cheniere becomes the top-paid executive among U.S.-based companies with a fiscal year ending Sept. 1 or later that have filed proxy statements for 2013, according to data compiled by Bloomberg. His $142 million pay package tops that for Levin, who runs global credit at Och-Ziff and received $119 million last year, and Gabelli, founder of money-management firm Gamco who was paid $85 million.

“Whoever came up with the objectives is probably smiling, and everybody who bought into this stock early on, they probably want to hug him,” Brent Longnecker, CEO of executive compensation consulting firm Longnecker & Associates, said by phone from the company’s Houston office.“They aren’t worried about his compensation.”

‘Paid Well’

Cheniere has surged 30-fold since November 2009, as executives positioned the company to become the first to export liquefied natural gas produced from the U.S. shale boom. The company has performed more than five times better than the Standard & Poor’s 500 Index in the last 12 months as it signed lucrative deals with customers and progressed in constructing its export terminal.

Diane Haggard, a spokeswoman for Cheniere, didn’t immediately respond to phone and e-mail requests seeking comment.

“They’re being paid well, but they’ve done a lot of very good work and created a lot of value at the same time,” said Will Frohnhoefer, a special situations equity analyst for BTIG LLC in New York, who rates Cheniere as a buy. “This is a management team that set a pretty high bar for itself and was able to execute on pretty much every element of it so far, I would say in pretty adverse conditions.”

Construction Goals

Souki has sold 2.8 million shares of Cheniere since the beginning of 2013, during which time the stock almost tripled, collecting about $95 million, according to regulatory filings and data compiled by Bloomberg. More than half of the proceeds were used to fulfill tax obligations, the filings show.

“The point of a stock award is to align interests with shareholders,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said in a phone interview from his office. “You’re supposed to keep it long term. If you’re selling it shortly after its awarded you’re losing the point of the whole thing.”

Souki’s $133 million stock award, comprised of 6.3 million units, vests depending on construction goals and average Cheniere share prices, according to the company’s proxy statement. The company rose 0.7 percent to close at $55.95 today in New York.

Cheniere said 2.1 million of the awarded shares vested last year, in equal installments in May and December, based on the company’s share performance. Another 1.26 million shares vested in May after Cheniere closed financing to begin construction on a portion of its export terminal in Louisiana, according to the filing.

Analyst Ratings

Of 12 analysts that cover the company, eight have buy ratings on Cheniere shares, according to data compiled by Bloomberg. Two rate the stock hold and two rate it sell, the data show.

“I suspect shareholders aren’t complaining given what’s happened with the stock,” Gary Hewitt, head of research at GMI Ratings, said in a phone interview from the company’s D.C. office.

The ranking uses information from the U.S. Securities and Exchange Commission-mandated summary compensation table, which reports some awards in the year they’re granted rather than for the year they’re earned. Some awards are restricted, vesting and paying out over a set time frame, and the receipt of others may depend on future performance goals. The summary compensation table also counts changes in pension and the value of perks.

Ellison, Tillerson

The $142 million pay package tops that for Larry Ellison, the billionaire founder of Oracle Corp. (ORCL) who was paid $78.4 million in fiscal 2013, according to the Redwood City, California-based company’s proxy statement. Ellison’s compensation included a $1 salary and $76.9 million in options. Oracle has a fiscal year end of May 31. He’s the eighth-richest person in the world, according to the Bloomberg Billionaires Index.

Souki’s 2013 pay is more than double his compensation in 2012 and is more than five times what Exxon Mobil Corp. CEO Rex Tillerson received last year, according to the Irving, Texas-based company’s summary compensation table. Tillerson, who runs the world’s largest publicly traded energy company and posted a 2013 profit of $32.6 billion, has not sold shares since 2011, according to company filings.

Chevron Corp. Chairman and CEO John Watson received $24 million in 2013, the San Ramon, California-based company’s summary compensation table shows.

Leonard Riggio, the founder and chairman of Barnes & Noble Inc., sold 3.7 million shares of the bookseller on April 16 for $64 million. The company fell 12 percent in the day following the sale. Richard Fairbank, the chairman and founder of Capital One Financial Corp., sold 910,000 shares of the McLean, Virginia-based lender in transactions through November for proceeds of about $44 million.

To contact the reporters on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net; Caleb Melby in New York at cmelby@bloomberg.net; Zain Shauk in Houston at zshauk@bloomberg.net

To contact the editors responsible for this story: Peter Newcomb at pnewcomb2@bloomberg.net Matthew G. Miller

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