Chesapeake (CHK) CEO McClendon Awarded No Bonus for FY12

January 7, 2013 5:11 PM EST
Following the 2012 annual meeting of shareholders, in June 2012, the Board of Directors (the “Board”) of Chesapeake Energy Corporation (NYSE: CHK) appointed five new independent directors, including an independent, non-executive Chairman of the Board. The newly constituted Board is undertaking a comprehensive review of the Company’s general corporate governance practices and executive compensation as part of an ongoing commitment to strengthen its oversight function. As a result of its ongoing review and as more fully described below, the Board has made a number of meaningful enhancements to the Company’s corporate governance structure and executive compensation arrangements, including:
  • determining that the Company will introduce management proposals at the 2013 annual meeting of shareholders to implement proxy access and remove supermajority voting standards in the Company’s certificate of incorporation and bylaws;

  • determining that the Company will, in the upcoming 2013 Oklahoma legislative session, continue to seek relief from the Oklahoma statute mandating classified boards of directors for certain Oklahoma-incorporated public companies or take other actions to allow shareholders to elect the entire board of directors at the 2013 annual meeting of shareholders;

  • determining that it will publish certain political expenditures on the Company’s website;

  • amending the Nominating, Governance and Social Responsibility Committee’s charter to implement policies with regard to Board oversight of corporate social responsibility and director candidate diversity;

  • enhancing the oversight function of the Board through various measures, including the appointment of a new general counsel, retention of a nationally recognized consultant to identify opportunities for the Company to reduce overhead expenses, significantly reducing annual budgeted charitable, trade association and political expenditures and implementing a rigorous oversight program for such payments and commitments;

  • adopting a compensation philosophy that emphasizes pay for performance and targets peer median compensation levels;

  • benchmarking executive compensation to the Company’s peer group, which peer group was also evaluated and modified by the Compensation Committee;

  • substantially reducing executive annual incentive compensation for 2012, including substantially reducing bonuses for executive officers and, following his recommendation to such effect, awarding Aubrey K. McClendon, the Company’s Chief Executive Officer, no bonus for 2012;

  • developing annual and long-term incentive executive compensation programs for 2013 that appropriately tie pay to performance;

  • approving new executive employment agreements with substantial changes from the Company’s previous executive employment agreements, including the elimination of “single-trigger” change-of-control cash payments; and

  • significantly reducing perquisites for executive officers, including eliminating, or further limiting in the case of Mr. McClendon, personal use of Company aircraft.

For more from the filing, click here.

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