(Reuters) - Chesapeake Energy Corp (CHK.N), 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.
Last year was rough for Chesapeake and McClendon. The company faced both a liquidity crisis brought on by low gas prices and heavy spending and a governance crisis that resulted in shareholders effectively taking control of the board of directors in June.
McClendon has come under fire 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.
The FWPP has also come under the scrutiny of the U.S. Securities and Exchange Commission and the Internal Revenue Service and Chesapeake’s board.
Other Reuters investigations found McClendon ran a $200 million hedge fund that traded in the same commodities the company produced and plotted with a competitor to suppress prices of oil and gas acreage in Michigan.
The U.S. Department of Justice is investigating Chesapeake’s land deals in Michigan.
As part of the company’s efforts to shore up governance, McClendon will also reimburse the company for his personal use of company aircraft in excess of $250,000. Previously that amount was $500,000, the filing said.
Chesapeake said it will make deep cuts to its executive’s incentive compensation, according to a filing with the U.S. Securities and Exchange Commission.
The Oklahoma City, Oklahoma company also pledged to implement a shareholder proposal passed in June that would eliminate the staggered election of its board of directors.
Chesapeake originally lobbied for the Oklahoma statute mandating classified boards but said it will now seek to have all of its directors elected on a annual basis, beginning in 2013.
Shares of Chesapeake edged lower after the close of regular trading. The stock fell to $17.58 from its New York Stock Exchange close of $17.62.
Reporting By Anna Driver; Editing by Bernard Orr