Chesapeake Energy to cut pay of outside directors

AP News
Posted: May 18, 2012 4:58 PM
Chesapeake Energy to cut pay of outside directors

Natural gas and oil producer Chesapeake Energy Corp. said Friday that it will cut the pay of outside directors on its board by 20 percent and eliminate their use of company aircraft.

The company said it is making the moves after consulting with an independent compensation adviser. Chesapeake has already said it will cut its CEO's pay package and name an outsider as chairman of the board.

Outside directors will now be paid $100,000 cash and $250,000 in stock per year, the company said. They will be barred from using "fractionally owned" aircraft for personal trips.

Chesapeake said the cuts bring the compensation of outside directors in line with the packages offered by peer companies.

A string of negative headlines have recently called Chesapeake's leadership and oversight into question. One of the most jarring was the revelation that CEO Aubrey McClendon took out personal loans from a company that planned to buy Chesapeake assets.

Chesapeake plans to cut McClendon's pay by 15 percent, to under $20 million a year. The company also has stripped McClendon of his board chairmanship. It said Friday that it is still searching for an independent, non-executive chairman of the board.

In addition Chesapeake will end a program that allows McClendon to make personal investments in the company's wells. The company said earlier this month that McClendon received $108.6 million from January to April from sales of company well assets.

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Chesapeake has been aggressively selling oil and gas assets to raise money to reduce debt and fund its operations. The company has found itself in a squeeze in part because natural gas prices plunged this year to 10-year lows. A surge of new drilling in the U.S. has boosted supplies and driven down prices.

Shares of Chesapeake rose 81 cents, or 6 percent, to close at $14.36. The stock has traded between $13.32 and $35.75 over the last 52 weeks.