Chesapeake Energy Corporation (NYSE:CHK), the Oklahoma City-based oil and gas producer, said in a regulatory filing that Aubrey McClendon will receive no bonus for the year 2012 on his own recommendation. The company has also limited his personal use of corporate aircraft. Chesapeake will also give shareholders the rights to nominate 25 percent of its directors.
McClendon has received $1.95 million of bonus every year since 2009. Chesapeake Energy Corporation (NYSE:CHK) said that compensation of directors in 2013 will be tied to their performance, and the company is currently developing the compensation plans. The natural gas producer has been heavily criticized for extravagant compensation and heavy spending on its directors and executives.
The company's shares plunged 27 percent last year. Local authorities and SEC are still investigating McClendon's financial dealings. In April 2012, Reuters found that McClendon had borrowed more than $1 billion from EIG Global Energy Partners, one of the biggest investors in Chesapeake. The company has weathered a liquidity crisis and sold $11 billion of assets to fill the balance sheet gap. Chesapeake said it has formed committees to review its compensation policy and corporate governance.
Chesapeake Energy Corporation (NYSE:CHK) has already reshuffled its top management in June 2012 after activist investor Carl Icahn and Southeastern Asset Management Inc., the two largest shareholders, proposed replacement of a majority of its directors. McClendon has been removed as the company's chairman, though he remains the chief executive.
Chesapeake has also reduced board compensation by 20 percent. The board now has five new members and a new chairman, who are taking a tighter control over the company to allay investor fears. Southeastern Asset Management praised Chesapeake and McClendon after the board reshuffle by calling it "the most significant governance changes that we have ever witnessed at a company."
The company will also introduce a new program under which investors, who have owned at least 3 percent of Chesapeake Energy Corporation (NYSE:CHK) shares for at least three years, will have the rights to nominate 25 percent of the company's directors.
The second-largest natural gas producer in the United States will reduce overhead expenses by $190 million within next two years. The company will also cut charitable spending by 30 percent, political spending by 40 percent and trade-related expenditures by 50 percent over the next three years.