Board of US LNG exporter Cheniere ousts CEO as company visions diverge

By JAMES PATON and STEPHEN STAPCZYNSKI
Bloomberg

Cheniere Energy replaced CEO Charif Souki, who billionaire investor Carl Icahn said wanted to take the US LNG producer in a direction that differed from the board’s vision.

Neal Shear, former head of Morgan Stanley’s commodities division and a Cheniere board member since 2014, will take over as interim CEO, according to the Houston-based company that will shortly begin exports of liquefied natural gas (LNG) from the US.

Icahn in a separate statement on his website congratulated the board for “having the guts” to make the change. Regulatory filings show Icahn, Cheniere’s largest shareholder, has boosted his stake to almost 14%.

“There is no doubt that Charif Souki has proven that he is a talented entrepreneur, but at this time there is also little doubt that the board wished to move the company in a direction that differed greatly from the path Mr. Souki wanted,” Icahn said.

The changes follow increased pressure from activist investors and a 42% slide in Cheniere’s share price this year as energy prices declined. Cheniere is on track to become the first US company to export LNG from the lower 48 states, allowing cheap shale supplies to reach global consumers. Its Sabine Pass terminal is in Louisiana.

CEO Search

Cheniere initially surged as much as 4% on Monday before erasing gains to trade 1.5% lower at $40.68 at 9:40 a.m. in New York. The board will immediately begin a search for a permanent CEO, according to the company.

“The changes announced today will serve Cheniere well in creating and sustaining shareholder value, while continuing to explore a limited number of strategic initiatives within the LNG industry,” newly-elected chairman G. Andrea Botta said in the statement.

Souki, a co-founder of Cheniere, has sold at least $116 million of shares in the company this year, shrinking his stake by a third, according to data compiled by Bloomberg from filings. Of the 1.77 million shares he sold, 1.55 million were for personal profit and the rest withheld by the company to cover his taxes on vesting shares.

Replacing Souki is “indicative of some of the challenges these LNG companies are under,” said Tom O’Sullivan, founder of Mathyos, a Tokyo-based energy consultant. “He had an expansionary policy.”

Gas Slides

US natural gas has dropped about 35% this year amid a supply surplus. Futures on Monday slumped to a 10-year low amid record warm weather.

Souki was the highest-paid executive in the US two years ago because of the company’s stock grants, drawing lawsuits from irate investors. Icahn said in August that he planned to discuss issues including executive compensation with management after disclosing an 8.2% stake.

Four investors sued in 2014, claiming Cheniere had disregarded its bylaws during a shareholder vote that put those shares into a compensation pool by ignoring abstentions instead of counting them in the “no” column. In a settlement earlier this year, the company agreed not to ask investors for more shares for the pool until 2017, and to seek stockholder approval for any additional payouts from it.

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