CHESAPEAKE'S MCCLENDON GETS $75 MILLION BONUS - Reward Comes After Stock Hits Bottom

(08/21/2009)

An Oklahoma judge ruled this week that Chesapeake Energy Corp. won't have to open its books to a shareholders' group.

It was a big victory for the company in its defense of a $75 million bonus given to CEO Aubrey McClendon last December.

Critics are calling it an outrageous personal bailout.

McClendon is the CEO who has variously threatened to take his marbles and go elsewhere, when he hasn't gotten his way in West Virginia.

The Louisiana Municipal Police Employees' Retirement System wanted to examine Chesapeake's books to try to determine why the independent natural gas producer's board of directors awarded the giant bonus.

It was after a year in which Chesapeake's stock price hit the basement and McClendon had to sell 31.5 million shares, or about 94 percent of his stake in the company, linked to because of a loan call-in last October.

Chesapeake's stock fell to $9.84 in December, its lowest since August 2003, after reaching a high of $74 last summer. It is now about $23.

Marc Gross, a New York-based attorney, said "From our perspective, this is nothing short of a bailout for Mr. McClendon."

The board did tighten up on McClendon after giving him the $75 million bonus.

McClendon agreed to a five-year contract with Chesapeake that caps his annual salary at about $1 million with about $2 million limits on his annual cash bonuses.

The Associated Press says the CEO's pay is the highest for a CEO among Standard & Poor's 500 companies.

It also was more than four times higher than his $25.5 million pay package in 2007.


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