Chesapeake Energy Corp. CEO Aubrey McClendon agreed to helm the Oklahoma City-based natural gas producer for another five years under a new employment contract that awarded him a one-time $75 million bonus for the leadership role he played in negotiating four joint ventures in the Haynesville, Woodford, Fayetteville and Marcellus shales.

According to a Securities and Exchange Commission (SEC) Form 8-K filing made on Wednesday, the board of directors agreed to a new five-year employment agreement with the CEO “in recognition of Mr. McClendon’s leadership role in completing a series of transactions in 2008 that were valuable to the company and its shareholders.”

McClendon was one of several executives forced by margin calls to sell stock late last year (see Daily GPI, Oct. 13, 2008). Triggered by a 76% drop in the company’s share price, McClendon last October sold around 31.5 million Chesapeake shares, or 94% of his holdings. Following the sale, rumors circulated that McClendon would be fired or might resign from the company that he cofounded in 1989.

The company’s board appeared unwilling to let McClendon leave, noting in the SEC filing that because of “other entrepreneurial opportunities” and the forced margin calls, it wanted to provide McClendon “a retention incentive.”

The amended contract guarantees McClendon, who also serves as company chair, a $75 million one-time bonus. After taxes, he is expected to net around $43.5 million, which would be used to cover his costs under a company program that allows him to personally own up to a 2.5% stake in the company’s future wells.

The board’s compensation committee noted that the revised retention plan considered the “substantial value” of four joint venture transactions created under McClendon’s watch last year: Plains Exploration and Production Co. bought 20% of Chesapeake’s Haynesville holdings for $3.3 billion (see Daily GPI, July 2, 2008); BP America bought 100% of the Woodford Shale holdings for $1.694 billion and 25% of the Fayetteville Shale acreage for $1.9 billion (see Daily GPI, Sept. 3, 2008); and StatoilHydro USA bought 32.5% of the Marcellus Shale leasehold for $3.375 billion (see Daily GPI, Nov. 12, 2008).

“The initial cash payment under the 2008 transactions permitted the company to recoup the cost basis of the assets sold in the 2008 transactions (book basis of approximately $1.7 billion), as well as all or virtually all of the cost basis of the interests in the Haynesville, Fayetteville and Marcellus plays retained by the company,” the filing noted.

Chesapeake generated $8.6 billion in net profit from the four transactions and still retained majority ownership positions in the co-development areas, which are valued at $25.9 billion on a prorated basis, the filing indicated.

McClendon agreed that absent a material breach by the company, he would not resign from his position for the next five years. He also agreed that through Dec. 31, 2013, his annual salary would remain at the 2008 level of $975,000. Annual cash bonuses also would not exceed the $1.95 million awarded to him in 2008.

The prior employment agreement required McClendon to hold Chesapeake common stock equal to 500% of his annual salary and annual cash bonuses. However, the board reduced the required stock percentage to 200% for 2009 to give McClendon “time to acquire additional shares.” The requirement reverts to 500% in 2010.

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