NEW YORK (THE WALL STREET JOURNAL via Dow Jones Newswires), Jan. 8, 2009
Chesapeake Energy Corp. Chief Executive Aubrey McClendon agreed to remain at the helm of the natural gas producer for at least five years, under a new employment contract that provides him a $75 million bonus.
Mr. McClendon was one of the most prominent executives swept up in a wave of margin calls last fall, which forced him to sell 94% of his Chesapeake holdings, worth more than $2 billion at their peak. The forced sale had led some analysts to speculate that Mr. McClendon might leave the company he co-founded in 1989.
The company's board took the talk to heart, saying that because of "other entrepreneurial opportunities" and Mr. McClendon's sales it "focused on providing a retention incentive," according to a regulatory filing Wednesday. Under the new contract, Mr. McClendon, who last fall had dismissed talk of his departure, promised not to resign for five years.
The agreement freezes Mr. McClendon's $975,000 salary for the five-year period, and caps his annual cash bonus at $1.95 million, the same as in 2008. Oklahoma City-based Chesapeake is the nation's largest producer of natural gas by volume.
The contract guarantees Mr. McClendon, who also serves as Chesapeake's chairman, a $75 million one-time bonus. That money -- about $43.5 million after taxes -- is meant to cover Mr. McClendon's costs under a program that allows him to personally own up to a 2.5% stake in future wells. The company does not disclose Mr. McClendon's earnings from his ownership stake, because it does not consider it to be compensation, the regulatory filing said.
One of the industry's most well-known and outspoken executives, Mr. McClendon in October was forced to sell 31.5 million Chesapeake shares, 94% of his holdings, to satisfy margin calls triggered by a 76% drop in Chesapeake's stock price. Chesapeake and other natural-gas producers have been hurt by tumbling commodities prices and heavy debt loads.
Copyright (c) 2008 Dow Jones & Company, Inc.
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