Back in October, Chesapeake Energy (NYSE: CHK) CEO Aubrey McClendon watched his company's stock price tumble along with energy prices -- as a result he faced margin calls and was forced to sell about 94% of his stake in the company.The stock is still down more than 75% from its 52-week high, but apparently the board of directors' independent compensation committee saw fit to reward McClendon with a new contract that included a one-time $75 million retention payment.
Under this new deal, McClendon will take a salary of $975,000 per year and agrees not to leave for five years.
Normally, I'd be skeptical of a new employment agreement and retention payment to a guy who's stock has lost most of its value. But McClendon's huge stake in the company -- and willingness to borrow money to increase it -- demonstrated tremendous confidence in the company's future and he personally lost about $2 billion when he received those margin calls. The recent decline in energy prices aside, he has a pretty impressive track record and he's worth retaining.
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Reader Comments (Page 1 of 1)
1-08-2009 @ 9:00PM
Ed said...
"But McClendon's huge stake in the company -- and willingness to borrow money to increase it -- demonstrated tremendous confidence in the company's future..."
Or tremendous financial incompetence.
1-09-2009 @ 9:16AM
BHarrison said...
Quote from article: ". . . to reward McClendon with a new contract that included a one-time $75 million retention payment." ". . . a salary of $975,000 per year and agrees not to leave for five years." . . . ". . . lost about $2 billion when he received those margin calls."
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This article somewhat mystifies me; I really don't know how to interpret it, not really. Could he have avoided the "margin call" (and the $2 billion loss? I wouldn't think that he could, not legitimately.
Was he demonstrating "tremendous confidence in the company" or was he just shrewedly "gaming" the situation as best he could do?
There was no mention of any stock option plans, etc. I really just don't know what to think about all of this. However, I am certainly "suspect" of all previous compensation plans in which many of these CEOs became "Billionaires". The compensations for CEOs has simply been too excessively exorbitant for too many decades.
CEOs are merely "management employees" of the corporations. I simply cannot discern where they, in anyway, warrant such compensations.