LNG Cheniere Energy Inc

Cheniere Energy Inc.'s board has voted to replace Chief Executive Charif Souki, according to people familiar with the matter, as the company prepares to become the first to export natural gas from the mainland U.S.

The shake-up comes four months after activist investor Carl Icahn took a big stake in the company and won two board seats.

Mr. Souki couldn't immediately be reached for comment.

The decision occurred at a weekend board meeting, where directors looked to clamp down on Mr. Souki's goal of building the company beyond its core plan of exporting liquefied natural gas, or LNG, the people said.

Mr. Souki has proposed the company build a second facility in Texas before its first, in Louisiana, is up and running. He has also suggested the company, which hasn't turned a profit in its 19 years in business, could expand into other parts of the energy industry.

Cheniere's directors felt the company needed a more experienced operator as it nears completion of its Louisiana export facility, the people said. Neal A. Shear, a director, will take over as chief executive on an interim basis while Cheniere hunts for a new leader. Director Andrea Botta will serve as the company's chairman, they added.

A relative newcomer to the oil patch, Mr. Souki built a multibillion-dollar natural-gas export facility along Louisiana's swampy coast and was the first to secure government permits to export U.S. gas after shale explorers unleashed a bounty of the fuel and rendered import facilities largely obsolete.

Though the notion of converting an important facility into an export terminal faced skepticism at first, Mr. Souki eventually found financial backers on Wall Street, including private-equity firm Blackstone Group LP, drawn by the prospect of selling cheap U.S. natural gas overseas, where it fetches higher prices.

Cheniere expects to make its first overseas shipments of gas soon. When that happens, it will be able to start collecting on contracts promising an eventual $4 billion-plus in annual fees.

Mr. Icahn unveiled an 8% stake in Cheniere in August, and shortly after placed two lieutenants on the board: Samuel Merksamer and Jonathan Christodoro.

Mr. Icahn was attracted to the stock by the contracts Cheniere has with big energy companies around the world that have agreed to pay fees to use the facility, people familiar with the matter said. The billionaire investor believes the company's stock is being dragged down by Mr. Souki's expansion plans, they said.

Cheniere shares, while up 675% in the past five years, are down 41% this year. The company has a market capitalization of about $9.7 billion.

Mr. Souki, a former banker and restaurateur, co-founded Cheniere in 1996 when he was in his early 40s. The company originally drilled for natural gas, but met little success. It later shifted strategies and began building the import terminal in 2004. The facility opened four years later just in time for a drilling boom that unleashed vast reserves of natural gas in the U.S. and caused prices to collapse.

Mr. Souki then pivoted to an export strategy, spending billions of dollars to outfit the terminal to ship out natural gas rather than receive it.

The facility in Sabine Pass, La., is expected to have cost $18 billion by the time it is completed.

Mr. Souki's pay has been problematic to some. In 2013, his compensation was valued at $142 million, making him one of the highest-paid executives in the U.S. A year ago, Cheniere cut Mr. Souki's salary to $1 and earlier this year settled a lawsuit brought by shareholders who took issue with Cheniere's plans to issue additional stock to executives.

Mr. Souki has sold more than 4 million Cheniere shares since 2012 for more than $200 million, and has about 3.4 million shares left—equal to about 1.4% of the company, according to FactSet. His most recent sale came on Dec. 2, when he cashed out 50,000 shares for about $2.3 million, according to a securities filing.

In filings, Mr. Icahn suggested he was seeking talks about Cheniere's compensation structure and capital spending. Last week, he again added to his position, bringing it to nearly 14% and making him Cheniere's largest shareholder, according to S&P Capital IQ.

Write to David Benoit at david.benoit@wsj.com and Ryan Dezember at ryan.dezember@wsj.com

(END) Dow Jones Newswires

December 13, 2015 19:35 ET (00:35 GMT)

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