Tuesday, May 1, 2012

Chesapeake Kills CEO Well Program

Chesapeake Energy announced this morning that it has negotiated an early termination to the controversial Founders Well Participation Program, in which CEO Aubrey McClendon is allowed a 2.5% working interest in all CHK wells. The program will end on June 30, 2014 instead of December 31, 2015 and McClendon will not get any additional compensation as a result of losing this perk. From the outside, cutting 18 months from the program doesn't sound like that big of a give because he still has two years to enjoy its benefits, but in truth, the program would have continued indefinitely until the company was called on it.

Additionally, Chesapeake, which has been spotlighted as a cauldron of poor corporate governance, is separating the CEO and Chairman position.  McClendon will remain CEO and an outside board member will be nominated Chairman. Only time will tell if this move has any real impact since the board is a pretty chummy group.

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