Chesapeake Energy Corp. (CHK: Quote) said in a regulatory filing on Monday that its chief executive Aubrey McClendon would not receive a bonus for 2012, a year of decade low natural gas prices, on his own recommendation.
According to the company, the bonus analysis developed by its Compensation Committee yielded payouts significantly below target for all executives.
Considering the company's performance in 2012, the Compensation Committee exercised negative discretion to further reduce the payouts. This led to average year-over-year reductions to executive bonuses of over 50 percent.
''...in accordance with Mr. McClendon's recommendation to such effect, the CEO receiving no bonus award for 2012,'' Chesapeake said in the filing.
Chesapeake is the second largest natural gas producer in the U.S. The company has been under investor scanner for sometime after McClendon was found to have taken loans of $1.2 billion using his stake in company wells obtained under a controversial program.
Facing pressure from key shareholders Southeastern Asset Management Inc. and Carl Icahn for a board rejig, in June 2012, Chesapeake appointed five new independent directors to its reconstituted nine-member board. The company also named Archie Dunham as its new independent non-executive chairman, replacing McClendon.
Chesapeake said in the filing that its Compensation Committee also undertook a comprehensive review of management perquisites. As a result, the personal use of fractionally-owned company aircraft was eliminated by all executive officers, other than McClendon.
The Compensation Committee requested McClendon, and he agreed, to reimburse the company for any such personal use exceeding $250,000 annually. Previously, McClendon had reimbursed the company for such personal use in excess of $500,000 per year.
The board determined that the company would introduce management proposals at the 2013 annual meeting of shareholders to implement proxy access and remove supermajority voting standards in Chesapeake's certificate of incorporation and bylaws.
The board will seek the approval of a proxy access bylaw from the holders of at least 66 2/3 percent of the issued and outstanding stock of the company.
The Compensation Committee also implemented a clawback policy, which allows the company to recover some incentive-based compensation from executive officers if the company is required to restate any financial statements.
CHK settled up around 1 percent on Monday at $17.62.
by RTT Staff Writer
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