Friday, June 26, 2009

Chesapeake’s McClendon defends pay package in Fort Worth Rotary speech

FORT WORTH, Texas - Aubrey McClendon, president and CEO of Chesapeake Energy, defended his $112 pay package before the Fort Worth Rotary Club.
McClendon got his board to approve the package even though Chesapeake’s stock price dropped 59 percent in 2008, and profits fell by half.
McClendon was a big backer of Republican politics, helping to underwrite the Swift Boat campaign against John Kerry in 2004. He now says that he’s independent, no longer contributing to so-called 527 advocacy groups, and that he voted for Barack Obama for president.
In the Barnett Shale of Texas, Chesapeake has been a pioneer in urban drilling in Fort Worth. In his home town of Oklahoma City, McClendon is widely celebrated for creating jobs and wealth and for luring an NBA franchise.
At least four pension funds have filed lawsuits against Chesapeake in connection with the pay plan and falling stock price. They’ve called his pay "a bailout," because it came after McClendon lost 94 percent of his company stock, once worth more than $2 billion. McClendon kept buying shares in 2008, borrowing
against his stake. When natural gas prices tumbled, Chesapeake’s stock dropped, too, and McClendon’s gamble went bad. He had to sell nearly everything to meet the margin call.
Glass, Lewis, & Co., a proxy-rating service that advises shareholders, gave Chesapeake an F on its measure of pay for performance ¬ after giving the company a D in 2007 and 2008. "Overall, the company pays significantly more
than its peers," Glass Lewis wrote, "but performed about the same as its peers."
(Source: Mitchell Schnurman, Fort Worth Star-Telegram)

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