Chesapeake Energy is still battling a tidal wave of negative press in a bid to prop up the stock price and prevent a “significant liquidity event” (i.e., being forced to sell the company). Their latest move is to reduce reduce the pay of board members and take away their private airplane rights. Still, board members get $350K per year, even after the 20 percent reduction.
From the Chesapeake press release:
The Board of Directors of Chesapeake Energy Corporation (NYSE:CHK) today announced that it has adopted a new compensation arrangement for outside directors that reduces compensation by approximately 20% and eliminates the use of fractionally owned aircraft for personal travel by outside directors. The Board has taken this action in consultation with an independent compensation advisor as part of a broader review of the company’s executive compensation programs. As noted in Chesapeake’s recently filed proxy statement, the Board had been reviewing its compensation for 2012 and beyond and today’s announcement completes that review process for the Board’s compensation arrangements. The proxy statement also discloses that the company has implemented a number of changes to its executive compensation program, including reducing the Chief Executive Officer’s compensation for 2011 and better aligning the entire executive management team’s compensation with company performance for 2012 and beyond, as well as retaining an independent compensation advisor for the Board’s Compensation Committee.
Under the new Board compensation arrangement, which is effective immediately, outside directors will receive total annual compensation of $350,000, comprised of a $100,000 cash component and a $250,000 equity component. This reduces director compensation to a level at or below the average director compensation of the company’s peers.
The Board also reported that the search for an independent Non-Executive Chairman is progressing. The Board’s Nominating and Corporate Governance Committee is considering potential candidates with no previous substantive relationship with Chesapeake. Upon the appointment of an independent Non-Executive Chairman, Aubrey K. McClendon will relinquish the position of Chairman and continue as Chief Executive Officer. The Board is continuing its review of the financing arrangements between Mr. McClendon (and the entities through which he participates in the FWPP) and any third party that has had or may have a relationship with the company in any capacity.
Merrill A. (“Pete”) Miller, Jr., Chesapeake’s Lead Independent Director and President and Chief Executive Officer of National Oilwell Varco, Inc., said, “Over the past year, the Board has been undertaking a review of, and implementing changes to, the company’s compensation programs. We believe these latest changes to the directors’ compensation will address concerns raised by shareholders and better align Chesapeake with its peers.”*
*Chesapeake Energy (May 18, 2012) – Chesapeake Energy Corporation Reduces Board Compensation