HOUSTON – Cheniere Energy and its executives asked a Delaware court late Monday to throw out a shareholder lawsuit that challenged $1.7 billion in stock awards, including most of CEO Charif Souki’s pay last year.
The Houston liquefied natural gas firm and its top brass argued the investors failed to establish a claim that would pass the court’s requirements to go to trial, and that they did not “state a claim upon which relief can be granted.” Cheniere said it would elaborate on the dispute in briefs to be filed later.
Cheniere officials and attorneys for the company and the executives did not immediately respond to requests for comment. An attorney for the investors declined to comment.
It was the first parry by the company in the three weeks after Cheniere shareholders alleged the company’s board didn’t have the authority to nearly triple stock awards to Souki and a handful of executives last year because a shareholder vote on the matter was not counted properly.
The investors say Cheniere did not count abstentions as no votes — as they contend is required by Delaware law — in a February 2013 vote on the company’s compensation plan first established in 2011. The increased payout would not have gotten shareholder approval under that counting, they said in a lawsuit filed in late May in the Delaware Court of Chancery.
Cheniere was incorporated in Delaware.
Cheniere claims ‘significant harm’
On Monday, Cheniere also applied with the Delaware court to validate the stock issuance, arguing it believed that under certain stock exchange rules, a shareholder vote on an equity compensation plan is measured by a majority of the votes cast and abstentions don’t count.
The company also said it had amended the 2011 plan in a proxy statement before the vote to include a clause that says abstentions will not be counted.
Doubt in the validity of the payout “creates the potential for significant harm to the company and its stockholders, as it threatens to undermine the purposes of the 2011 plan, which has
been spectacularly successful in incentivizing the Company’s executives,” the company said in the application.
The lawsuit seeks “to invalidate the compensation that has been earned by and paid to Cheniere executives,” which could “have an obvious detrimental impact on the company and its stockholders,” the firm added.
Stock rises
Souki, who also serves as Cheniere’s chairman and president, got $142 million in total pay last year, the bulk of which came from $133 million in stock awards that investors are contesting. Cheniere’s future briefs in the case will be filed on a schedule the parties agree to or the court determines, it said in court documents.
Next year, Cheniere is slated to become the first U.S. LNG exporter as it gears up to send tankers with liquefied natural gas to overseas markets from its export facility in Louisiana.
A surge of cheap, abundant natural gas in the United States had flipped the company’s LNG business on its head after the energy industry figured out how to extract hydrocarbons from deep-seated shale rock in North America. Its share price has grown nearly twenty-fold since the beginning of 2010, when it began to plan to turn LNG import facilities into export facilities.
Cheniere shares rose sharply Monday on the news that the Federal Energy Regulatory Committee late Friday pushed the company’s proposed LNG project in Corpus Christi closer to approval after it passed a key environmental review.
The company’s shares closed up $1.42 on Monday at $67.71 on the New York Stock Exchange.
Also on FuelFix:
Houston energy chief tops list as median CEO pay crosses $10 million
Photo: James Nielsen / Houston Chronicle
Charif Souki, CEO of Cheniere Energy speaks during an interview, Cheniere is among Houston's top workplaces, according to a Chronicle survey.
Continue clicking to see the highest paid CEOs in the energy industry.
less
Charif Souki, CEO of Cheniere Energy speaks during an interview, Cheniere is among Houston's top workplaces, according to a Chronicle survey.
Continue clicking to see the highest paid CEOs in the energy
... more
Photo: James Nielsen / Houston Chronicle
<b>Anthony Petrello
Nabors Industries</b>
Total pay: $68,246,187
Change from 2012: up 246 percent
Base salary: $1,700,000
Bonus, perks, deferred compensation: $47,859,226
Stock options and awards: $18,686,961
less
<b>Anthony Petrello
Nabors Industries</b>
Total pay: $68,246,187
Change from 2012: up 246 percent
Base salary: $1,700,000
Bonus, perks, deferred compensation: $47,859,226
Stock options and
... more
Photo: Dave Rossman / Associated Press
<b>John B. Hess
Hess Corp.</b>
Total pay: $13,826,574
Change from 2012: up 38 percent
Base salary: $1,500,000
Bonus, perks, deferred compensation: $3,815,266
Stock options and awards: $8,511,308
less
<b>John B. Hess
Hess Corp.</b>
Total pay: $13,826,574
Change from 2012: up 38 percent
Base salary: $1,500,000
Bonus, perks, deferred compensation: $3,815,266
Stock options and awards:
... more
Photo: F. CARTER SMTIH / BLOOMBERG NEWS
<b>William Klesse
Valero Energy Corp.</b>
Total pay: $13,903,056
Change from 2012: up 11 percent
Base salary: $1,500,000
Bonus, perks, deferred compensation: $4,799,441
Stock options and awards: $7,603,615
less
<b>William Klesse
Valero Energy Corp.</b>
Total pay: $13,903,056
Change from 2012: up 11 percent
Base salary: $1,500,000
Bonus, perks, deferred compensation: $4,799,441
Stock options and
... more
Photo: Aaron M. Sprecher / Bloomberg
<b>Jeffrey R. Immelt
General Electric</b>
Total pay: $19,202,302
Change from 2012: down 7 percent
Base salary: $3,466,667
Bonus, perks, deferred compensation: $7,958,444
Stock options and awards: $7,777,191
less
<b>Jeffrey R. Immelt
General Electric</b>
Total pay: $19,202,302
Change from 2012: down 7 percent
Base salary: $3,466,667
Bonus, perks, deferred compensation: $7,958,444
Stock options and
... more
Photo: ALAIN JOCARD / AFP/Getty Images
<b>John S. Watson
Chevron Corporation</b>
Total pay: $20,239,494
Change from 2012: down 9 percent
Base salary: $1,770,833
Bonus, perks, deferred compensation: $3,431,911
Stock options and awards: $15,036,750
less
<b>John S. Watson
Chevron Corporation</b>
Total pay: $20,239,494
Change from 2012: down 9 percent
Base salary: $1,770,833
Bonus, perks, deferred compensation: $3,431,911
Stock options and
... more
Photo: Mayra Beltran / Houston Chronicle
<b>Andrew Liveris
Dow Chemical Co.</b>
Total pay: $20,452,877
Change from 2012: up 21 percent
Base salary: $1,865,500
Bonus, perks, deferred compensation: $4,951,146
Stock options and awards: $13,636,231
less
<b>Andrew Liveris
Dow Chemical Co.</b>
Total pay: $20,452,877
Change from 2012: up 21 percent
Base salary: $1,865,500
Bonus, perks, deferred compensation: $4,951,146
Stock options and
... more
Photo: Andrew Harrer / Bloomberg
<b>Dave Lesar
Halliburton</b>
Total pay: $20,865,214
Change from 2012: up 20 percent
Base salary: $1,630,000
Bonus, perks, deferred compensation: $12,059,967
Stock options and awards: $7,175,247
less
<b>Dave Lesar
Halliburton</b>
Total pay: $20,865,214
Change from 2012: up 20 percent
Base salary: $1,630,000
Bonus, perks, deferred compensation: $12,059,967
Stock options and awards:
... more
Photo: Melissa Phillip / Houston Chronicle
<b>Brian D. Jellison
Roper Industries</b>
Total pay: $21,368,796
Change from 2012: up 18 percent
Base salary: $1,200,000
Bonus, perks, deferred compensation: $2,885,796
Stock options and awards: $17,283,000
less
<b>Brian D. Jellison
Roper Industries</b>
Total pay: $21,368,796
Change from 2012: up 18 percent
Base salary: $1,200,000
Bonus, perks, deferred compensation: $2,885,796
Stock options and
... more
<b>Paal Kibsgaard
Schlumberger</b>
Total pay: $22,005,349
Change from 2012: up 47 percent
Base salary: $1,700,000
Bonus, perks, deferred compensation: $3,165,380
Stock options and awards: $17,139,969
less
<b>Paal Kibsgaard
Schlumberger</b>
Total pay: $22,005,349
Change from 2012: up 47 percent
Base salary: $1,700,000
Bonus, perks, deferred compensation: $3,165,380
Stock options and awards:
... more
Photo: Schlumberger / Schlumberger
<b>Laurence Fink
BlackRock</b>
Total pay: $22,942,256
Change from 2012: up 13 percent
Base salary: $500,000
Bonus, perks, deferred compensation: $10,042,500
Stock options and awards: $12,399,756
less
<b>Laurence Fink
BlackRock</b>
Total pay: $22,942,256
Change from 2012: up 13 percent
Base salary: $500,000
Bonus, perks, deferred compensation: $10,042,500
Stock options and awards:
... more
Photo: Mark Lennihan / Associated Press
<b>Alexander Cutler
Eaton</b>
Total pay: $23,097,458
Change from 2012: up 24 percent
Base salary: $1,200,000
Bonus, perks, deferred compensation: $17,647,428
Stock options and awards: $4,250,030
less
<b>Alexander Cutler
Eaton</b>
Total pay: $23,097,458
Change from 2012: up 24 percent
Base salary: $1,200,000
Bonus, perks, deferred compensation: $17,647,428
Stock options and awards:
... more
Photo: Jin Lee/Bloomberg News / Jin Lee/Bloomberg News
<b>Rex Tillerson
Exxon Mobil</b>
Total pay: $28,138,329
Change from 2012: up 3 percent
Base salary: $2,717,000
Bonus, perks, deferred compensation: $4,166,704
Stock options and awards: $21,254,625
less
<b>Rex Tillerson
Exxon Mobil</b>
Total pay: $28,138,329
Change from 2012: up 3 percent
Base salary: $2,717,000
Bonus, perks, deferred compensation: $4,166,704
Stock options and awards:
... more
Photo: Dave Rossman / For the Houston Chronicle
<b>Richard Adkerson
Freeport-McMoRan Copper & Gold Inc.</b>
Total pay: $55,260,539
Change from 2012: up 294 percent
Base salary: $2,500,000
Bonus, perks, deferred compensation: $37,959,323
Stock options and awards: $14,801,216
less
<b>Richard Adkerson
Freeport-McMoRan Copper & Gold Inc.</b>
Total pay: $55,260,539
Change from 2012: up 294 percent
Base salary: $2,500,000
Bonus, perks, deferred compensation: $37,959,323
... more
Photo: CHIP EAST / REUTERS
Cheniere: Revoking high executive payout would be detrimental to company