Chesapeake Energy Corp. confirmed Thursday it is treating CEO Aubrey McClendon's impending departure as a termination without cause, not a retirement.
The difference could be called a matter of semantics, but it is worth up to $60 million to McClendon.
McClendon, who co-founded the company with former partner Tom Ward in 1989, would owe Chesapeake about $11.25 million if he retired, according to regulatory filings. The amount represents the balance on McClendon's $75 million bonus from 2008.
Instead he is due to receive about $47 million in severance pay, benefits and accelerated equity compensation since his separation from the company is treated as a termination without cause under his employment agreement.
“He will be entitled to termination compensation and benefits accordingly,” the company said Thursday in a filing to the U.S. Securities and Exchange Commission.
Chesapeake spokesman Michael Kehs said the $11.25 million payback does not apply to McClendon's departure from the company.
“This was a mutual decision between Mr. McClendon and the board that Mr. McClendon would retire from the company,” Kehs said Thursday. “Under the specific terms of his contract, there was no recoupment unless Mr. McClendon unilaterally decided to leave the Company or was terminated with cause; neither situation applied here.”
Chesapeake's 2012 proxy detailed several scenarios under which McClendon might leave the company, including termination with cause, termination without cause, retirement, incapacitation and death.
Each of those scenarios has a different payment amount attached to it.
Oppenheimer analyst Fadel Gheit said it appears Chesapeake tried to dress up McClendon's departure in deference to his time at the company he co-founded.
“He obviously did not leave on his own,” Gheit said. “He was pushed out. He was terminated.”
Gheit said Chesapeake might come to regret its lack of clarity in announcing McClendon's departure.
“They could be subject to shareholders lawsuits here,” he said. “Obviously it's a very gray area.”
McClendon, 53, has been dogged by questions about the mingling of his personal businesses with Chesapeake's since Reuters reported last spring that he had secured more than $1 billion in loans against his stake in company wells.
The ensuing shareholder unrest resulted in McClendon being replaced as board chairman by former Conoco executive Archie Dunham amid a shake-up that left Chesapeake's two largest shareholders in control, with four other seats on the board.
McClendon remained as CEO, but the board's audit committee began an extensive review of his personal finances.
That still-pending review, which has not revealed any improper conduct by McClendon, was not the reason the company and the only chief executive it has ever had decided to begin searching for a new leader, according to Tuesday's announcement.
McClendon will leave the company on April 1.
Editor's Note: Chesapeake Energy Corp. spokesman Michael Kehs has further clarified information in this story. Chesapeake CEO Aubrey McClendon will continue to serve as Chief Executive Officer, President and a director until the earlier of April 1, 2013 or the time at which his successor is appointed. McClendon will leave the company on April 1, 2013. Also, under terms stated in Chesapeake's proxy, McClendon could have been required to repay up to $11.25 million of his $75 million bonus in 2008 if his departure were considered a unilateral decision to retire. Because it is considered "termination without cause," McClendon instead will receive severance pay, benefits, and accelerated equity compensation of about $47 million.