Chesapeake Energy CEO gets 2009 pay package of $18.6 million; down from $112.5 million in 2008

Chesapeake Energy CEO’s 2009 pay drops to $18.6M

Chesapeake Energy Chairman and CEO Aubrey McClendon, whose $112.5 million pay package last year drew the ire of shareholders as the company recorded billions in losses, took home nearly $18.6 million in 2009 according to an Associated Press calculation of data filed with regulators.

McClendon’s 2008 compensation was the highest for a CEO among Standard & Poor’s 500 companies, based on an AP analysis. It included a $75 million bonus that came after McClendon was forced to sell more than 31 million shares of Chesapeake stock — valued at $550 million down from a peak of $2.2 billion only three months earlier — to cover bank demands for loan repayments.

McClendon, Chesapeake’s co-founder, owns a small stake in some of the company’s wells and is required to help cover the cost of developing and maintaining those wells. According to documents filed with the SEC, McClendon is paying his share of the well costs out of that $75 million bonus. Chesapeake also said that bonus was meant to reward him for the role he played in several major transactions, including joint ventures with some of the world’s biggest energy companies.

As part of a five-year employment agreement, McClendon’s salary is capped at $975,000 per year and his annual cash bonus is limited to $1.95 million. In 2009, McClendon also received stock awards worth $14 million on the days they were granted, down from $32.7 million in 2008, according to the company’s April 30 filing.

He also received other compensation worth $1.6 million, including $445,984 worth of personal use of company aircraft, $623,366 in company-paid accounting services and $438,750 in matching contributions to Chesapeake’s retirement plan.

Oklahoma City-based Chesapeake lost $5.85 billion, or $9.57 per share, in 2009 as it wrote down the value of its gas and oil properties amid the recession. Without the charges, Chesapeake would have made $1.6 billion, or $2.55 per share.

Revenue fell to $7.7 billion in 2009 from $11.6 billion in 2008. But the company’s share price rallied 60 percent over the course of the year to end 2009 at $25.88.

The Associated Press formula is designed to isolate the value the company’s board placed on an executive’s total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don’t include changes in the present value of pension benefits, making the AP total different in most cases than the total reported by companies to the Securities and Exchange Commission.