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Chesapeake's New Board has Completely Cut CEO McClendon's Bonus

By Joao Peixe | Tue, 08 January 2013 21:49 | 0

Chesapeake Energy Corp (NYSE:CHK) is the second largest natural gas company in the US, and one of the giants that has led the US shale gas boom over the last ten years. It has also found its self grabbing unwanted media headlines due to the dealings of its colourful Chief Executive Officer Aubrey McClendon, which led the corporation to lose $1.07 billion during the first nine months of 2012, and net debt to rise by 56% to $16.1 billion; with the stock sliding by 25%.

Back in April, after media reports suggested that McClendon was using the company’s assets as collateral for private loans and had also been using company jets for personal trips, the board of Directors began to investigate all of his personal financial transactions to ensure no conflict of duties.

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This resulted in the one of the largest investors, Charles Icahn, pressuring the board to strip McClendon of his role as chairman, replace more than half of the board, and reduce board members pay by 20%.

The new board has now cut incentive compensation for executives and reduced the perks available. They will also develop a long-term, annual compensation plan which ties pay to performance. McClendon has had his bonus completely withdrawn, but that was in accordance with his own recommendation.”

According to Bloomberg, Chesapeake has only had a positive cash flow twice in the last 21 years, the last time being back in 2001. Icahn has stated that a positive cash flow is possible, but will require a lot of work.

By. Joao Peixe of Oilprice.com

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