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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
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Executive Chairman Employment Agreement
On
October 1, 2021, Tellurian Inc. (“Tellurian” or the “Company”) entered into an employment
agreement with the Company’s Executive Chairman, Charif Souki (the “Executive Chairman Employment Agreement”).
The Executive Chairman Employment Agreement has an initial three-year term and will automatically renew for an additional 12-month term
at the end of the initial three-year term and each subsequent one-year anniversary thereafter, unless terminated by the Company or Mr. Souki
pursuant to its terms.
The
Executive Chairman Employment Agreement provides for an annual base salary of $1,200,000, which is consistent with the level of Mr. Souki’s
cash compensation for fiscal year 2021 and is subject to annual review by the board of directors of the Company (the “Board”).
In addition, the Executive Chairman Employment Agreement provides for a discretionary annual cash bonus target of 150% of Mr. Souki’s
annual base salary, subject to a cap of 300% of Mr. Souki’s annual base salary and, with certain exceptions, Mr. Souki’s
continued employment through the payment date of the annual cash bonus. Payment of any such annual cash bonus will be based on Mr. Souki’s
and the Company’s performance, as determined by the Board (or a committee thereof) in its sole discretion. The Executive Chairman
Employment Agreement also provides that the Company must reimburse Mr. Souki for business expenses incurred in carrying out his duties and responsibilities under the agreement.
If
Mr. Souki resigns for “good reason” or the Company terminates Mr. Souki’s employment without “cause”
(in each case, as such term is defined in the Executive Chairman Employment Agreement), then the Company must pay Mr. Souki (i) any
unpaid prior year annual bonus; (ii) a pro-rated portion of the annual cash bonus for the year of termination, calculated based on
actual performance; and (iii) an amount of cash equal to two times the sum of Mr. Souki’s (A) annual base salary
and (B) discretionary annual cash bonus target (such resulting amount, the “Executive Chairman Severance Payments”),
paid in substantially equal installments over a 12-month period following the date of termination. If Mr. Souki’s employment
is terminated for “good reason” or without “cause” on a change of control or during the 12-month period thereafter,
then the Executive Chairman Severance Payments would be increased to an amount of cash equal to three times (from two times) the sum of
Mr. Souki’s (A) annual base salary and (B) discretionary annual cash bonus target and paid in a lump sum on the sixtieth
day following such termination.
The
foregoing description of the Executive Chairman Employment Agreement does not purport to be complete and is qualified in its entirety
by reference to the full text of the Executive Chairman Employment Agreement, which is filed as Exhibit 10.1 to this report and incorporated
herein by reference.
CEO Employment Agreement
Also
on October 1, 2021, the Company entered into an employment agreement with the Company’s President and Chief Executive
Officer, Octávio Simões (the “CEO Employment Agreement”). The CEO Employment Agreement has an initial
term through June 5, 2024 (the “Initial CEO Term”) and will automatically renew for an additional 12-month term
at the end of the Initial CEO Term and each subsequent one-year anniversary thereafter, unless terminated by the Company or Mr. Simões
pursuant to its terms.
The CEO Employment
Agreement provides for an annual base salary of $725,000, which is consistent with Mr. Simões's current annual base salary
and is subject to annual review by the Board. In addition, the CEO Employment Agreement provides for a discretionary annual cash
bonus target of 125% of Mr. Simões’s annual base salary, subject to a cap of 218.75% of Mr. Simões’s
annual base salary and, with certain exceptions, Mr. Simões’s continued employment through the payment date of the
annual cash bonus. Payment of any such annual cash bonus will be based on Mr. Simões’s and the Company’s
performance, as determined by the Board (or a committee thereof) in its sole discretion. The CEO Employment Agreement also provides
that the Company must reimburse Mr. Simões for business expenses incurred in
carrying out his duties and responsibilities under the agreement.
Pursuant
to the CEO Employment Agreement, the parties agreed to amend the terms of Mr. Simões’s restricted stock agreements covering
a total of 2,000,000 shares of Tellurian restricted stock and a cash incentive award agreement (together with the restricted stock agreements,
the “Award Agreements”) providing for a cash award of up to $5,000,000 (in each case vesting in one-third increments
upon an affirmative final investment decision by the Board (“FID”) and the first and second anniversaries of FID) to
provide that (i) the continuous service provisions of the Award Agreements will no longer apply to the applicable restricted stock
or cash awards thereunder after the Initial CEO Term, assuming that Mr. Simões’s employment has not terminated prior
thereto, and (ii) if Mr. Simões’s employment terminates for any reason following the Initial CEO Term and Mr. Simões
fails to execute and deliver a release of claims in favor of the Company and its subsidiaries after the date of termination, then the
Company may request that the stock or cash (net of tax withholding) awarded to Mr. Simões under the Award Agreements be returned
to the Company.
If
Mr. Simões resigns for “good reason” or the Company terminates Mr. Simões’s employment without
“cause” (in each case, as such term is defined in the CEO Employment Agreement), then the Company must pay Mr. Simões
(i) any unpaid prior year annual bonus; (ii) a pro-rated portion of the annual cash bonus for the year of termination, calculated
based on actual performance; and (iii) an amount of cash equal to two times the sum of Mr. Simões’s (A) annual
base salary and (B) discretionary annual cash bonus target (such resulting amount, the “CEO Severance Payments”),
paid in substantially equal installments over a 12-month period following the date of termination. If Mr. Simões’s employment
is terminated for “good reason” or without “cause” on a change of control or during the 12-month period thereafter,
then the CEO Severance Payments would be increased to an amount of cash equal to three times (from two times) the sum of Mr. Simões’s
(A) annual base salary and (B) discretionary annual cash bonus target and paid in a lump sum on the sixtieth day following such
termination.
The
foregoing description of the CEO Employment Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the CEO Employment Agreement, which is filed as Exhibit 10.2 to this report and incorporated herein by reference.