In 2013, Charif Souki's compensation package totaled $142 million, which made him one of the highest-paid CEOs in the country. On Sunday, he was ousted from Cheniere Energy (LNG), the Houston-based company he co-founded.
Shares of Cheniere Energy are down 41% for the year and closed down 2.79% on Monday. It is a steep decline for a company that has had an impressive five-year run, with its shares soaring 704% in that time.
Much of Cheniere Energy's recent decline can be attributed to the slide in crude prices, which are closely related to the price of the liquefied natural gas Cheniere runs through its pipelines. The company has also been troubled by questions about executive compensation and Souki's plans for expansion despite a challenging energy market.
"According to the board, with the first Sabine LNG train nearing completion, Cheniere will transition into an operating company, hence the logic for a management change -- though that probably doesn't explain everything," Pavel Molchanov of Raymond James said in a note on Monday.
Transition into an operating company is a pivot from focusing on investment and will allow the company to have "stable and growing positive cash flow."
"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," Board Chairman G. Andrea Botta said in a statement announcing the changes.
The decision to remove Souki from his position and replace him on an interim basis with Neal Shear was supported by Carl Icahn, who added to his position in Cheniere Energy early last week. Icahn now has a 14% stake in the company.
"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 in a statement released on Monday. "It is also telling that Mr. Souki sold a great deal of his stock, which made it somewhat easier for him to 'swing for the fences,' making it a win-win for Mr. Souki but not necessarily for the shareholders."
Analysts have taken a more cautious stance on the implications of Souki's ousting. While they did not expect him to be able to stay with the company long given activist pressure, they did not expect his termination to be so sudden.
"Our concern is that Mr. Souki's sudden departure could cause other critical management team members to leave the firm," Faisal Khan of Citigroup said in a note on Monday. "Furthermore, we do not believe the current interim CEO and chairman have sufficient experience operating and managing Cheniere's large capital budget and construction timetable."