Chesapeake CEO Under Fire For $75 Million Bonus

Shareholders are asking questions after learning Chesapeake CEO Aubrey McClendon was awarded a $75 million bonus.

Tuesday, April 7th 2009, 7:18 pm

By: News 9


By Amy Lester, NEWS 9

OKLAHOMA CITY -- Aubrey McClendon signed a new contract last New Year's Eve, promising him $75 million as an inventive award, or bonus and now shareholders are asking questions.

A group of shareholders is going to court to try and force Chesapeake to let them inspect company records to determine why McClendon got such a large sum.

"It seemed like an odd moment in time for some major bonus," attorney Adam Prussin said.

Prussin is one of the lawyers representing the Louisiana Municipal Police Employee Retirement System, which owns 85,000 shares of Chesapeake stock. They want answers from the company.

"I don't think the shareholders are feeling kindly to the notion that the CEO gets bailed out of his problems, but they don't get bailed out of theirs," Prussin said.

According to McClendon's agreement, he must use the $75 million to personally invest in wells the company drills. He cannot just spend the money on whatever he wants.

The agreement also lowers the amount of stock he has to own. His old contract called for ownership of an investment value equal to 500 percent of his salary and cash bonuses. Since he was forced to liquidate his stocks last year, the agreement changes that number to 200 percent.

It'll return to 500 next year.

"This just seemed to be potentially another example of an unearned bonus or an excessive compensation for a CEO whose company didn't really do so well," Prussin said.

The employment agreement said the bonus was earned and explains that McClendon negotiated deals bringing in more than $10 billion, last year.

The bonus is less than one percent of that value.

McClendon has also agreed to cap his salary for the next five years at $975,000 and his bonuses at just under $2 million a year.

McClendon's last employment agreement was for five years, signed in 2007. The latest agreement updates the previous contract.

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