Chesapeake Energy is treating CEO Aubrey McClendon’s departure from the company “as a termination without cause under his employment agreement,” a move that allows millions in payments to the company’s co-founder when he leaves April 1.
On Tuesday, the Oklahoma City-based company announced that McClendon, 53, would retire from the company he helped start in 1989. He will remain CEO while the oil and gas producer searches for a successor. Chesapeake is the No. 2 producer in the Barnett Shale and employs several hundred people in Fort Worth.
In a filing Thursday with the Securities and Exchange Commission, the company said McClendon is entitled to his base salary of $975,000 and annual bonus of $1.95 million for another four years. That’s $2.925 million a year, or $11.7 million total, payable “in equal installments” as normal payroll, according to his employment contract.
According to past filings detailing McClendon’s compensation, he also is entitled to $33.5 million when awards of restricted stock vest, or become effective, ahead of schedule. That raises the total compensation to $45.2 million.
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Both Bloomberg News and The Wall Street Journal, citing unnamed sources, reported that the company will not “claw back” any of the $75 million it granted McClendon in 2008 after the company’s share price collapsed, forcing McClendon to sell nearly all his 33.5 million shares in Chesapeake. Bloomberg estimated the foregone value of the clawback at $11 million.
McClendon still holds 3 million Chesapeake shares, less than 1 percent of its outstanding stock, according to a Jan. 4 disclosure.
According to McClendon’s employment agreement, termination with cause would have meant “the company will not have any obligation to provide any further payments or benefits to the executive after the effective date of such termination.”
Termination with cause was defined as willfully failing to perform necessary duties, or engaging in illegal conduct or violating company policies in a way that materially harms the company.
An internal board investigation of McClendon’s borrowings used to finance his stake in company wells, launched last year, has found nothing improper, the company said Tuesday when it announced his pending departure.
Federal regulators are looking into the matter as well as possible antitrust violations related to leasing in Michigan.