This is a move on the part of the company to ‘clamp down’ on its leaders. Essentially the pay and perks (such as the right of directors to use company aircraft) that outside directors currently receive will be cut substantially. Pay will be cut by no less than 20%, and these changes should bring the company’s pay packages in line with what other companies are offering to directors that function at the same level as these directors.
However, it is interesting to note that even with these cuts the directors of Chesapeake will still be receiving a higher rate of pay than their counterparts in other companies. This is the second (or third depending on how you look at it) move by the company to get management in line. Recently, it also cut CEO pay following news that its CEO was taking out loans using the company as collateral and hired an outsider as Chairman. The company has been suffering substantially due to falling gas process, and this may simply be a way for it to recoup some of its losses. This news makes me, personally, feel better about the company in terms of its future stability. It is definitely a step in a positive direction as far as investors are concerned.
However concern remains regarding the company’s apparent inability to reign in the aforementioned CEO, Aubrey McClendon.To continue reading, click here.