HOUSTON (Dow Jones Newswires), June 13, 2011
Chesapeake Chief Executive Aubrey McClendon was re-elected Friday as chairman of the Oklahoma City energy producer, though the voting results showed a significant decline in shareholder support for one of the highest paid executives in the U.S.
McClendon, who had come under fire from an influential advisory firm that called for his ouster from the board, garnered about 78% of the votes cast at Chesapeake's annual shareholder meeting. Friday's vote ensures the 51-year-old executive will remain chairman into 2014, but the results signal diminished shareholder support for McClendon, who received more than 96% of the vote in 2008, the last time he stood for re-election to the board.
"This is a remarkable level of opposition," said Carol Bowie, head of compensation policy at Institutional Shareholder Services, the proxy advisory service that called for McClendon's departure from the board. Corporate board elections rarely yield opposition greater than 10%, Bowie said.
Chesapeake spokesman Jim Gipson said the vote shows "overwhelming support for management and for our board." He added that in 2008, McClendon's nearly unanimous re-election came as the company's stock climbed to a record high of $74 on historically high natural gas prices. Chesapeake shares traded Friday at $29.34, off 1.41% amid broader market declines.
McClendon, who helped found Chesapeake in 1989 and build it into the second-largest natural gas producer in the U.S., has been one of the highest paid executives in any sector in recent years, collecting compensation valued at more than $152 million since 2008. His 2010 pay package was valued at more than $21 million, according to securities filings.
ISS recommended shareholders remove McClendon from the board, citing an executive compensation system that is not tied to performance standards.
On Thursday, just ahead of the meeting, Chesapeake seemed to cave in to some of ISS's pressure, when it announced it hired an "independent compensation consultant" and committed to implement a pay system recommended by that firm that "includes objective performance criteria."
On Friday, Chesapeake's shareholders narrowly approved the company's executive compensation plan, giving the proposal about 58% of the vote, indicating widespread shareholder discontent.
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, corporations must now provide shareholders with a nonbinding advisory vote on the compensation of named executive officers. So far, opposition to pay plans has been rare. According to ISS, shareholders have opposed proposals at only 31 companies out of 2,230 that had held votes by June 1.
In a separate tally, shareholders overwhelmingly asked that the plan be reviewed annually, following the board's recommendation.
Copyright (c) 2011 Dow Jones & Company, Inc.
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