In a filing made public Wednesday, Chesapeake Energy Corporation (NYSE:CHK), revealed plans of conducting a “comprehensive review” of compensation for some of its executive and senior vice presidents.
Looks like, ‘comprehensive review’ is a part of the bigger plan from the company for saving on costs. The company has been struggling financially, amid tumbling natural-gas prices and increased supply. The energy company has been selling off assets and plans to lower its debt to $9.5 billion by the end of the year, from $14 billion in the second quarter. As a cost saving measure, the natural-gas producer sliced board-member’s compensation by 20%, earlier this year. Also, recently, the Oklahoma-based oil and gas company revealed that its Barnett Shale headquarters building in Fort Worth was being shopped to potential buyers, and the company recently laid off 70 workers from its Barnett Shale operation. The company revealed that it plans to raise at least $13 billion from asset sales, in order to close a gap between planned spending and decreased revenue. As a part of its plans, Chesapeake Energy Corporation (NYSE:CHK) announced last month that it would sell $7 billion worth of oil-and-gas assets.
The company said in its filing with the U.S. Securities and Exchange Commission that it has extended agreements with its senior and executive vice presidents until the end of 2012, which will allow the board’s compensation committee “sufficient time to complete the comprehensive review it is undertaking, with respect to executive compensation matters”. Two of Chesapeake Energy Corporation (NYSE:CHK)’s largest shareholders, Carl Icahn and Mason Hawkins, hand-picked four directors and a new independent chairman in June, following Reuters investigations concerning potential conflicts of interest by Chief Executive Officer Aubrey McClendon. The latest filing definitely highlights that the so-far silent nine-member board, under independent chairman Archie Dunham, are taking action.
“It’s evidence of the new chairman and newly constituted board exhibiting influence on how things are run there,” said Morningstar analyst Mark Hanson. Just a few days ago, the embattled natural-gas producer signed a new deal with the lenders of its revolving credit facility. The new deal allows the company to take on debt up to six times greater than its earnings; earlier, the same limit was only up to four times of the earnings.
