SIGforum.com    Main Page  Hop To Forum Categories  The Lounge    Debt-stricken Chesapeake Energy to advance incentive executive pay

Moderators: Chris Orndorff, LDD
Go
New
Find
Notify
Tools
Reply
  
Debt-stricken Chesapeake Energy to advance incentive executive pay Login/Join 
Drill Here, Drill Now
Picture of tatortodd
posted
Changing executive incentive pay from stocks to cash and even giving incentive pay reeks of sticking it to debt holders, bond holders, and shareholders.

Here is an incentive, there are zero oil & gas jobs for the executives to run off to so why do they need retention bonuses? Furthermore, who the hell would hire someone that performs significantly worse than their peers (e.g Devon Energy performed 4.5x better BEFORE COVID-19 2/1/19 TO 1/31/20, and 3x better during COVID-19 2/1/20 to 5/8/20)?
quote:
Debt-stricken Chesapeake Energy to advance incentive executive pay

David French

NEW YORK (Reuters) - Chesapeake Energy Corp said it would prepay a total of $25 million in incentive compensation to 21 top executives to ensure they are motivated, even as it prepares to file for bankruptcy protection to tackle its nearly $9 billion debt pile.

The Oklahoma City-based company, co-founded by late wildcatter and outspoken natural gas proponent Aubrey McClendon, has been struggling with an unprecedented rout in oil and gas prices, as the coronavirus-driven economic downturn saps energy demand. Reuters reported last month that Chesapeake was in discussions to line up bankruptcy financing.

The move comes as investors are closely monitoring executive pay at struggling energy firms after Whiting Petroleum Corp and Diamond Offshore Drilling changed incentive programs for their senior management teams in the days before filing for Chapter 11 last month to award them cash sums.

“The board and compensation committee, with the advice of their independent compensation consultant and legal advisors, determined that the historic compensation structure and performance metrics would not be effective in motivating and incentivizing the company’s workforce,” Chesapeake said in a regulatory filing published on Friday.

Executive officers, including CEO Robert Lawler, will earn half their incentive compensation based on their continued employment for a period of up to 12 months and half based on achieving certain incentive metrics, the company said.

In exchange for receiving their 2020 incentive compensation now in cash, the executives waived participation in the company’s annual bonus plan and equity compensation awards in 2020. They will have to refund the incentive compensation if the targets are not met, Chesapeake said.

At the same time, the company’s four highest-paid executives agreed to cuts in their 2020 incentive compensation. Lawler, Chief Financial Officer Domenic Dell’Osso, Executive Vice President of Exploration and Production Frank Patterson and General Counsel James Webb had their 2020 incentive compensation cut between 28% and 34%.

Moreover, Chesapeake added it would convert its annual incentive plan for other employees into a program that would pay “cash retention payments earned on a quarterly basis over a 12-month period”. These payments are also contingent on continued employment, according to Chesapeake.

In an April 29 filing, Chesapeake had said Lawler would receive $15.4 million for 2019, of which $9.7 million was a bonus payment in shares and another $1.8 million was in stock options. Dell’Osso got $5.5 million, of which $3.5 million came in stock.

Chesapeake’s stock has fallen by 91% this year. The company completed a reverse stock split in April to avoid being delisted from the New York Stock Exchange.



Ego is the anesthesia that deadens the pain of stupidity

DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.
 
Posts: 19150 | Location: N. Houston, TX | Registered: November 14, 2005Reply With QuoteReport This Post
Member
Picture of P250UA5
posted Hide Post
Based on the above, glad CHK is a small customer for us & DVN is a pretty big one.




The Enemy's gate is down.
 
Posts: 8133 | Location: Spring, TX | Registered: July 11, 2011Reply With QuoteReport This Post
Member
Picture of mjlennon
posted Hide Post
Here’s a 3 month chart of chk bOnd due in August. Originally issued in 2010 at 6.625% yield. That $100 Bond is trading at $3 and change. Chk is toast.

 
Posts: 1464 | Location: Georgia | Registered: December 08, 2005Reply With QuoteReport This Post
The Ice Cream Man
posted Hide Post
They need to be paid in cash, so that the company has employees, during bankruptcy. No idea whether or not their compensation is appropriate.
 
Posts: 3918 | Location: Republic of Ice Cream, Myrtle Beach, SC | Registered: May 24, 2007Reply With QuoteReport This Post
Member
Picture of mjlennon
posted Hide Post
 
Posts: 1464 | Location: Georgia | Registered: December 08, 2005Reply With QuoteReport This Post
Member
Picture of Wishbone
posted Hide Post
I worked there for 7 years during their hayday. It was crazy the amount of spending that was going on.
 
Posts: 884 | Location: Oklahoma | Registered: November 23, 2005Reply With QuoteReport This Post
  Powered by Social Strata  
 

SIGforum.com    Main Page  Hop To Forum Categories  The Lounge    Debt-stricken Chesapeake Energy to advance incentive executive pay

© SIGforum 2020