Tuesday, May 5, 2009

Natural Gas Payday for CEO

HOUSTON, May 4 (Reuters) - Chesapeake Energy Corp (CHK.N) defended its decision to award a $75 million one-time bonus to its CEO and sought to explain other deals the gas company has struck with the executive, including the purchase of a collection of his maps for $12.1 million, a regulatory filing on Monday showed.

The bonus was first disclosed in January when Chesapeake's board renewed Chief Executive Aubrey McClendon's employment contract, but recent newspaper reports and the company's annual proxy statement have intensified scrutiny.

Chesapeake's directors said they gave the bonus to McClendon to recognize his "extraordinary contribution" to production deals struck during 2008 that added $10 billion in "intrinsic value" to the company, the filings said.

Chesapeake, led by McClendon, struck a number of billion-dollar production and acreage deals in 2008 with companies including Norway's StatoilHydro (STL.OL), raising valuable cash for the heavily-leveraged company.

But while the deals created value, Chesapeake stock investors did not have a great year.

The company's shares fell nearly 60 percent in 2008, underperforming a 35 percent drop in the American Stock Exchange index of natural gas companies .XNG.

In the latest SEC filing, the company also defends the $12.1 million purchase of a map collection that McClendon owned and the company's sponsorship of a National Basketball Association team, the Oklahoma City Thunder, in which the executive has an interest.

In December 2008, Chesapeake bought an extensive collection of antique historical maps of the American Southwest from McClendon for $12.1 million at cost, the filing said.

"These maps complement the interior design features of our campus buildings and contribute to our workplace culture," the filing said.

Chesapeake is due to report first-quarter earnings after the close of trading on Monday. (Reporting by Anna Driver, editing by Gerald E. McCormick)

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