Share-Based Compensation |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation |
SHARE-BASED COMPENSATION
We have granted stock, restricted stock, phantom units and options to purchase common stock to employees, outside directors and a consultant under the Cheniere Energy, Inc. Amended and Restated 1997 Stock Option Plan (the “1997 Plan”), Amended and Restated 2003 Stock Incentive Plan, as amended (the “2003 Plan”), 2011 Incentive Plan, as amended (the “2011 Plan”) and the 2015 Long-Term Cash Incentive Plan (the “2015 Plan”).
The 1997 Plan provides for the issuance of stock options to purchase up to 5.0 million shares of our common stock, all of which have been granted. Non-qualified stock options were granted to employees, contract service providers and outside directors. The 2003 Plan and 2011 Plan provide for the issuance of 21.0 million shares and 35.0 million shares, respectively, of our common stock that may be in the form of non-qualified stock options, incentive stock options, purchased stock, restricted (non-vested) stock, bonus (unrestricted) stock, stock appreciation rights, phantom units and other share-based performance awards deemed by the Compensation Committee of our Board (the “Compensation Committee”) to be consistent with the purposes of the 2003 Plan and 2011 Plan. As of December 31, 2015, all of the shares under the 2003 Plan have been granted and 26.9 million shares, net of cancellations, have been granted under the 2011 Plan. The 2015 Plan generally provides for cash-settled awards in the form of stock appreciation rights, phantom unit awards, performance unit awards, other-stock based awards and cash awards.
In August 2012, the Compensation Committee granted the Long-Term Commercial Bonus Award for Trains 1 and 2 of the SPL Project, which consisted of approximately $60 million in cash awards and 10 million restricted shares of common stock under the 2011 Plan. Upon grant, 35% of the restricted stock award vested when SPL issued a notice to proceed (“NTP”) to Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) under the lump sum turnkey contract for the engineering, procurement and construction of Trains 1 and 2 of the SPL Project. The remainder of the restricted stock awards vest on each of the first four anniversaries of NTP at the rate of 10%, 15%, 15% and 25%. As of December 31, 2015, 75% of the restricted stock awards had vested, and the remaining 25% of the awards will vest in August 2016.
In February 2013, the Compensation Committee granted the Long-Term Commercial Bonus Awards related to Trains 3 and 4 of the SPL Project under the 2003 Plan and 2011 Plan. A portion of each employee’s Long-Term Commercial Bonus Award for Trains 3 and 4 of the SPL Project was granted as a stock price award (“Stock Price Award”), with vesting of the Stock Price Award conditional on the achievement of minimum average Company stock price hurdles, and a portion was granted as a milestone award (“Milestone Award”), with vesting of the Milestone Award conditional on certain performance milestones relating to financing and constructing Trains 3 and 4 of the SPL Project. As of December 31, 2015, 100% of the Stock Price Awards had vested and 50% of the Milestone Awards had vested. The remaining 20% and 30% of Milestone Awards will vest upon substantial completion of Train 4 of the SPL Project, as defined in the EPC contract for Trains 3 and 4 of the SPL Project, and on the first anniversary thereof, respectively.
In April 2015, the Compensation Committee recommended and our Board approved the 2014-2018 Long-Term Cash Incentive Program (the “2014-2018 LTIP”) under the Company’s 2015 Plan. The 2014-2018 LTIP consists of phantom units settled in cash with five consecutive annual performance periods commencing on November 1 and ending on October 31 of each year from November 1, 2013 through October 31, 2018. Awards under the 2014-2018 LTIP will be subject to a three-year vesting schedule, with one-third of the phantom units vesting and becoming payable on each of the first, second and third anniversaries of the date of the grant (with the exception of the initial grant for the 2014 performance period, which will vest and become payable on each of February 1, 2016, February 1, 2017 and February 1, 2018). The 2014-2018 LTIP is 100% performance-based and will reward long-term performance measured against growth in the Company’s market capitalization, referred to in the plan documents as total shareholder value (“TSV”), above certain thresholds. Under the 2014-2018 LTIP, the general pool is awarded generally between 2% and 4% of the growth in TSV and the senior executive pool is capped at 2% of the growth in TSV, with the Chief Executive Officer’s compensation targeted at 50% of the senior executive pool, subject to adjustment at the discretion of the Compensation Committee. The number of phantom units comprising the senior executive pool has also been capped, and cannot exceed an amount equal to 1.5% of the shares of our common stock outstanding in any one year.
For the years ended December 31, 2015, 2014 and 2013, the total share-based compensation expense, net of capitalization, recognized in our net loss was $172.4 million, $102.0 million and $271.4 million, respectively, and for the same periods we capitalized as part of the cost of capital assets $22.9 million, $8.2 million and $12.5 million, respectively.
The total unrecognized compensation cost at December 31, 2015 relating to non-vested share-based compensation arrangements was $182.7 million, which is expected to be recognized over a weighted average period of 2.2 years.
During the year ended December 31, 2014, we recognized $10.8 million of share-based compensation expense related to the modification of long-term commercial bonus awards resulting from an employee termination. We did not have any modifications during the years ended December 31, 2015 and 2013.
We have disclosed the deferred tax benefit realized from share-based compensation exercised during the annual period in Note 12—Income Taxes. A valuation allowance equal to the deferred tax asset has been established due to the uncertainty of realizing the tax benefits related to this deferred tax asset.
Restricted Stock
Restricted stock awards are awards of common stock that are subject to restrictions on transfer and to a risk of forfeiture if the recipient terminates employment with the Company prior to the lapse of the restrictions. For the years ended December 31, 2015, 2014 and 2013, we issued 19,000 shares, 550,000 shares and 18,860,000 shares, respectively, of restricted stock awards to our employees, executives, directors and a consultant. These awards vest based on service conditions (one, three or four-year service periods), performance conditions and/or market conditions. The amortization of the value of restricted stock grants is accounted for as a charge to compensation expense or capitalized, depending on the employee, with a corresponding increase to additional paid-in-capital over the requisite service period.
Grants of restricted stock to employees and non-employee directors that vest based on service and/or performance conditions are measured at the closing quoted market price of the Company’s common stock on the grant date. For restricted stock awards granted to non-employees that vest based on service and/or performance conditions, the Company records compensation cost equal to the fair value of the award at the measurement date, which is determined to be the earlier of the performance commitment date or the service completion date. In addition, compensation cost for unvested restricted stock awards to non-employees is adjusted quarterly for any changes in the Company’s stock price.
Grants of restricted stock to employees and non-employees based on market conditions are measured using valuations based on Monte Carlo simulations. There were no restricted stock awards granted with market conditions in 2015 or 2014. For the awards granted in 2013 with market conditions, we used the following variables in our Monte Carlo simulations:
The table below provides a summary of our restricted stock outstanding as of December 31, 2015 and changes during the year ended December 31, 2015 (in thousands, except for per share information):
The weighted average grant date fair values per share of restricted stock granted during the years ended December 31, 2015, 2014 and 2013 were $70.43, $60.09 and $21.89, respectively. The total grant date fair value of restricted stock vested during the years ended December 31, 2015, 2014 and 2013 were $50.2 million, $84.0 million and $227.3 million, respectively.
Phantom Units
Phantom units are share-based awards granted to employees over a vesting period that entitle the grantee to receive the cash equivalent to the value of a share of our common stock upon each vesting. Phantom units are not eligible to receive quarterly distributions. We initially measure compensation cost based on our stock price on the grant date, which is included in accrued liabilities on our Consolidated Balance Sheets and is adjusted quarterly for any changes in our stock price and period of service rendered. During the years ended December 31, 2015 and 2014, we granted 5.9 million and approximately 79,000 phantom units, respectively, to employees, including units awarded under the 2015 Plan. We did not grant any phantom units to employees during the year ended December 31, 2013. The value of phantom units vested during the year ended December 31, 2015 was $4.6 million. There were no vestings of phantom units during the year ended December 31, 2014.
Stock Options
Stock options to employees are valued at the date of grant using a Black-Scholes valuation model and the cost is recognized over the option vesting period. We did not issue any options to purchase shares of our common stock and did not declare dividends on our common stock during the years ended December 31, 2015, 2014 and 2013.
The table below provides a summary of our options outstanding as of December 31, 2015 and changes during the year ended December 31, 2015:
The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $2.7 million, $11.9 million and $2.0 million, respectively. We received $2.3 million, $10.8 million and $3.7 million during the years ended December 31, 2015, 2014 and 2013, respectively, of proceeds from the exercise of stock options.
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