Chesapeake defends CEO pay package, posts $6B loss in Q1

OKLAHOMA CITY -- The defense came the same day Chesapeake posted a nearly $6 billion loss for the first quarter because of tumbling natural gas prices.

Chesapeake, one of the nation's largest gas producers, said it lost $5.7 billion, or $9.63 a share, for the quarter ended March 31 compared with a loss of $132 million, or 29 cents a share, in the year-ago quarter.

Excluding special charges, Chesapeake recorded profit of $277 million, or 46 cents a share, for the quarter.

Analysts surveyed by Thomson Reuters expected Chesapeake to report profit of 49 cents a share. Those estimates typically exclude charges.

At least two investor groups have challenged the package awarded to co-founder Aubrey McClendon at a time when Chesapeake, one of the largest natural gas producers in the United States, has seen its share price decimated.

Chesapeake stock fell 58% last year.

In a regulatory filing, Chesapeake said McClendon was rewarded for personally closing four deals that amounted to $10.3 billion in proceeds and $8.7 billion in economic gain.

McClendon's pay package was tops on an Associated Press calculation of pay packages for CEOs in the Standard & Poor's 500, even though energy companies saw profits plunge along with oil and natural gas prices.

"Late last year, after weeks of careful consideration and deliberation, Chesapeake's board amended Aubrey's employment agreement and provided a carefully tailored incentive award with the understanding it was an unusual action during a period when collapsing natural gas prices forced Chesapeake's stock price to decline, liquidity challenges were negatively impacting the industry and the country faced the worst economic crisis in at least 50 years," according to the filing.

The board, as part of the amended pay packaged, required McClendon to invest in the company's drilling programs so that he takes risks alongside the company.