Chesapeake's McClendon will not receive 2012 bonus

Mon Jan 7, 2013 7:41pm EST
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By Anna Driver and Brian Grow

(Reuters) - Chesapeake Energy Corp (CHK.N: Quote), the U.S. oil and gas company battling a governance crisis and financial strain, said on Monday its chief executive officer, Aubrey McClendon, will not receive a bonus for 2012.

The board, in a filing to regulators, said it made several changes to the company's corporate governance structure and executive pay. The company said McClendon recommended he not receive a bonus.

Other actions taken include deep cuts to incentive pay, a ban on personal jet travel for top executives other than McClendon, and measures to increase shareholder influence.

Last year was rough for Chesapeake and McClendon. The company faced both a liquidity crisis brought on by low natural gas prices and heavy spending and a governance crisis that resulted in big shareholders effectively taking control of the board of directors in June.

McClendon is under scrutiny from federal regulators and his board for blurring the line between his personal dealings and that of the company. He was stripped of his title as chairman of the company he co-founded in 1989 last year.

A Reuters investigation published in April found that McClendon had arranged to personally borrow more than $1 billion from EIG Global Energy Partners, a firm that also is a big investor in Chesapeake.

The loans, arranged through McClendon's personal shell companies, were secured by his interest in company wells. McClendon is allowed to take a 2.5 percent stake in every single well Chesapeake drills under a controversial program called the Founders Well Participation Program (FWPP).

He must also shoulder the same percentage of the wells' costs. After the Reuters report on McClendon's personal loans, the company's board, at the urging of major shareholders, said in May it would end the well program 18 months early in June 2014.   Continued...

Chief Executive Officer, Chairman, and Co-founder of Chesapeake Energy Corporation Aubrey McClendon walks through the French Quarter in New Orleans, Louisiana March 26, 2012. REUTERS/Sean Gardner