Chesapeake Energy Corp. (CHK) said its Board has renegotiated the terms of the company's Founder Well Participation Program, or FWPP, with Chairman and Chief Executive Officer Aubrey McClendon to provide for the early termination of the FWPP on June 30, 2014, 18 months before the end of its current term on December 31, 2015. McClendon will receive no compensation of any kind in connection with the early termination of the FWPP.
The FWPP, which was approved by shareholders for a 10-year term in 2005, in conjunction with McClendon's employment agreement with the company, provides McClendon a contractual right to participate and invest as a working interest owner in new wells drilled on the company's leasehold. McClendon has agreed to forego such contractual right 18 months early without compensation.
The Board of Directors will name an independent, Non-Executive Chairman in the near future. The Board's Nominating and Corporate Governance Committee is considering potential candidates with no previous substantive relationship with Chesapeake and will be soliciting input from major shareholders. Upon the appointment of a Non-Executive Chairman, McClendon will relinquish the position of Chairman and continue as Chief Executive Officer.
McClendon has indicated his support of the Board's decision to name a Non-Executive Chairman and waived any rights he might have under his employment agreement as a result of no longer serving as Chairman.
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