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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Incentive Compensation Program and Form
Restricted Stock Amendment
On January 6, 2022, the
named executive officers of Tellurian Inc. (“Tellurian” or the “Company”) were made eligible to
participate in the Tellurian Inc. Incentive Compensation Program (the “Incentive Compensation Program”). The Incentive
Compensation Program allows the Company to award short-term and long-term performance-based incentive compensation to selected full-time
employees of the Company, including the Company’s named executive officers. In exchange for being made eligible to participate in
the Incentive Compensation Program, the Company’s President and Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, General Counsel, and Chief Accounting Officer agreed to amendments (each, a “Form Restricted Stock Amendment”)
to their existing equity-based award agreements, which amendments make uniform the definitions of “cause” and “change
of control” in the award agreements and provide for all such awards to have “double trigger” vesting upon a change of
control of the Company.
Short-term and long-term incentive
awards under the Incentive Compensation Program may be earned with respect to each calendar year and are determined based on target and
maximum amounts established by the administrator of the Incentive Compensation Program (the “Administrator”). The Compensation
Committee (the “Compensation Committee”) of the board of directors (the “Board”) of the Company
is expected to act as the Administrator. Below are the 2022 base salary, target and maximum awards, and 2021 awards with respect to short-term
and long-term incentive awards under the Incentive Compensation Program for the Company’s named executive officers (provided that
in the case of the Company’s Executive Chairman and President and Chief Executive Officer, no target or maximum long-term incentive
award has been approved):
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Short-term incentive award
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Long-term incentive award
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Name and principal position
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2022 base salary (1)
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Target award
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Maximum award
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2021
award
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Target award
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Maximum award
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2021
award
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Charif Souki, Executive Chairman
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$
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1,200,000
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$
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1,800,000
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$
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3,600,000
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$
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3,600,000
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N/A
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N/A
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$
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14,062,250
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Octávio M.C. Simões, President and CEO
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$
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1,000,000
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$
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1,250,000
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$
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2,187,500
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$
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1,655,938
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N/A
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N/A
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$
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5,437,500
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R. Keith Teague, Chief Operating Officer
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$
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750,000
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$
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750,000
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$
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1,312,500
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$
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1,015,000
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$
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2,250,000
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$
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4,500,000
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$
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3,045,000
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L. Kian Granmayeh, Chief Financial Officer
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$
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500,000
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$
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500,000
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$
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875,000
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$
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805,000
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$
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1,500,000
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$
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3,000,000
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$
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2,415,000
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Daniel A. Belhumeur, General Counsel
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$
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500,000
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$
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500,000
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$
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875,000
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$
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805,000
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$
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1,500,000
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$
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3,000,000
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$
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2,415,000
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Khaled A. Sharafeldin, Chief Accounting Officer
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$
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440,000
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$
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440,000
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$
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704,000
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$
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659,200
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$
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880,000
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$
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1,760,000
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$
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1,442,000
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(1)
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On January 6, 2022, the Compensation Committee of the Board approved, effective as of January 1,
2022, increases in the base salaries of Mr. Simões (from $725,000), Mr. Teague (from $580,000), Mr. Granmayeh (from
$460,000), Mr. Belhumeur (from $460,000) and Mr. Sharafeldin (from $412,000), in each case in exchange for the applicable named
executive officer agreeing to the aforementioned amendments to his existing equity-based award agreements.
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The amount of a short-term incentive award or
a long-term incentive award, as applicable, is determined by the Administrator in its discretion. The value of any long-term incentive
award made under the Incentive Compensation Program is reduced by the amount of any cash payments received or to be received by a participant
pursuant to such participant’s construction incentive award agreement, if any, in the same calendar year as the calendar year in
which such long-term incentive award is made under the Incentive Compensation Program.
Short-term incentive awards
under the Incentive Compensation Program are payable in cash upon or shortly after being awarded, and long-term incentive awards are payable
as set forth in a long-term incentive award agreement to be entered into between the employee and the Company, the form of which will
be determined by the Administrator. Unless otherwise provided by the applicable long-term incentive award agreement, a long-term incentive
award granted pursuant to the Incentive Compensation Program will vest as follows, subject to the participant’s continued employment
with the Company or its affiliates and the participant’s continued compliance with any restrictive covenants by which such participant
is bound, through each vesting date: (i) one-third of the award vests on the grant date, (ii) one-third of the award vests on
the first anniversary of the grant date and (iii) one-third of the award vests on the second anniversary of the grant date.
The foregoing description
of the Incentive Compensation Program and Form Restricted Stock Amendments does not purport to be complete and is qualified in its entirety
by reference to the full text of the Incentive Compensation Program and Form Restricted Stock Amendments, copies of which are attached
as Exhibits 10.1, 10.2 and 10.3 to this report and incorporated herein by reference.
Form Long-Term Incentive Award Agreement
The Company made the 2021
long-term incentive awards under the Incentive Compensation Program to the Company’s named executive officers pursuant to forms
of Long-Term Incentive Award Agreements (each, a “Form LTI Award Agreement”). Pursuant to the Incentive Compensation
Program and the Form LTI Award Agreements, long-term incentive awards for a calendar year for which performance is measured will be made
in the form of “Tracking Units,” with each Tracking Unit having a value generally equal to one share of Tellurian common
stock. The Form LTI Award Agreements provide that Tracking Units will vest as follows: (i) one-third of the Tracking Units vests
on the grant date (“Tranche 1”), (ii) one-third of the Tracking Units vests on the first
anniversary of the grant date (“Tranche 2”) and (iii) one-third of the Tracking Units vests
on the second anniversary of the grant date (“Tranche 3”), subject to the provisions described
below regarding certain terminations of employment.
Pursuant to the Form LTI
Award Agreements, Tranche 1 of an award is payable as soon as practicable following the grant date of the Tracking Units, but
in no event later than March 15 of the year of grant, in a cash amount equal to the closing Company common stock price on the
trading day prior to the date of grant of such award, multiplied by the number of Tranche 1 Tracking Units. Tracking Units in
Tranche 2 and Tranche 3 of an award that become vested are payable as soon as practicable following the vesting date of
the applicable tranche, but no later than 30 days following such vesting date, in a cash amount equal to the closing Company
common stock price on the trading day prior to the vesting date of the applicable tranche, multiplied by the number of vested
Tracking Units with respect to such tranche.
The Form LTI Award Agreements
provide that, in the event of (i) a participant’s termination of employment by the Company or its affiliates for Cause (as
such term is defined in the Form LTI Award Agreements) or (ii) in the case of the Form LTI Award Agreement applicable to the Company’s
named executive officers other than Mr. Sharafeldin, such participant’s resignation without Good Reason (as such term is defined
in the applicable Form LTI Award Agreement), all Tracking Units granted to such participant, whether vested or unvested, will be automatically
forfeited as of the date of such termination. In the event of a participant’s termination of employment with the Company or its
affiliates due to such participant’s death or disability, by the Company or its affiliates without Cause, or if applicable by the
participant for Good Reason, subject to the participant’s execution and non-revocation of a release of claims and continued compliance
with all confidentiality obligations and restrictive covenants such participant is subject to, any vested and unpaid Tracking Units will
be paid as set forth in the applicable Form LTI Award Agreement as if the participant remained employed through the date of payment and
any unvested Tracking Units will remain eligible to vest and be paid following such termination of employment as if the participant remained
employed through the applicable vesting dates.
The foregoing description
of the Form LTI Award Agreements under the Incentive Compensation Program does not purport to be complete and is qualified in its entirety
by reference to the full text of the Form LTI Award Agreement, which is attached as Exhibit 10.4 to this report and incorporated
herein by reference.
Restricted Stock Unit Award
Also on January 6, 2022,
the Compensation Committee approved the issuance of 174,942 restricted stock units to Mr. Granmayeh, the Company’s Chief Financial
Officer. Each restricted stock unit represents a contingent right to receive on or within thirty days after vesting one share of Tellurian
common stock, cash of equal value, or a combination of both, as determined by the Company in its sole discretion. The restricted stock
units were granted pursuant to a form of restricted stock unit agreement under the Amended and Restated Tellurian Inc. 2016 Omnibus Incentive
Compensation Plan that was filed as Exhibit 10.5 to the Company’s quarterly report on Form 10-Q for the quarterly period
ended September 30, 2021 (the “Form RSU Agreement”). The restricted stock units generally will vest in one-third
increments upon an affirmative final investment decision by the Board with respect to the Driftwood liquefied natural gas project and
the first two anniversaries thereof.
The foregoing description
of the restricted stock units does not purport to be complete and is qualified in its entirety by reference to the full text of the Form
RSU Agreement, which is incorporated herein by reference.
Severance Plan
Also on January 6, 2022,
the Compensation Committee of the Board approved the Tellurian Inc. Executive Severance Plan (the “Executive Severance Plan”),
which provides for the payment of cash severance and the provision of certain other termination benefits to members of the executive committee
other than Mr. Souki and Mr. Simões upon an involuntary termination of employment from the Company or its subsidiaries.
The Executive Severance Plan will be administered by the Compensation Committee of the Board.
Severance benefits are payable
under the Executive Severance Plan only if the participant is involuntarily terminated without Cause (as such term is defined in the Executive
Severance Plan) or the participant resigns for Good Reason (as such term is defined in the Executive Severance Plan). Termination for
any other reason does not result in the payment of severance. The severance benefits payable under the Executive Severance Plan for any
termination initiated by (i) the Company for any reason other than Cause or the participant’s death or disability or (ii) the
participant for Good Reason, in either case occurring prior to a change in control, are as follows: (A) 100% of base salary, paid
in installments over 12 months; (B) any earned but unpaid short-term incentive under the Incentive Compensation Program; (C) 100%
of the target short-term incentive under the Incentive Compensation Program; (D) subsidized cost of COBRA coverage for the lesser
of (1) 12 months or (2) the duration of the COBRA coverage; and (E) certain outplacement services for 12 months.
The severance benefits payable under the Executive Severance Plan for any qualifying terminations occurring on, or within two years following,
a change in control are as follows: (i) 200% of base salary, paid in a lump sum; (ii) any earned but unpaid short-term incentive
under the Incentive Compensation Program; (iii) 200% of the target short-term incentive under the Incentive Compensation Program;
(iv) subsidized cost of COBRA coverage for the lesser of (A) 18 months or (B) the duration of the COBRA coverage; and (v) certain
outplacement services for 18 months.
Participation in the Executive
Severance Plan requires adherence to the Executive Severance Plan’s restrictive covenants. These include (i) a requirement
not to disclose confidential information or use confidential information to solicit Company clients, (ii) a 12-month non-solicitation
of Company employees, and (iii) a 12-month non-compete. Each participant in the Executive Severance Plan must sign a full release
of claims as a prerequisite to receiving any severance pay under the Executive Severance Plan. The Company may discontinue cash severance
if a participant fails to abide by the restrictive covenants.
Prior to a change in control,
the Board may amend or terminate the Executive Severance Plan in its discretion. In the event of a change in control, the Executive Severance
Plan may only be amended or terminated if such amendment (i) is required by law, (ii) increases the benefits payable to participants
or otherwise improves their rights under the Executive Severance Plan, or (iii) is consented to in writing by the affected participants.
The foregoing description
of the Executive Severance Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the
Executive Severance Plan, which is attached as Exhibit 10.5 to this report and incorporated herein by reference.