Chesapeake Energy Corp (CHK.N), the U.S. oil and gas company battling a governance crisis and financial strain, said on Monday its chief executive officer, Aubrey McClendon, will not receive a bonus for 2012.
The board, in a filing to regulators, said it made several changes to the company's corporate governance structure and executive pay. The company said McClendon recommended he not receive a bonus.
Last year was rough for Chesapeake and McClendon. The company faced both a liquidity crisis brought on by low natural gas prices and heavy spending and a governance crisis that resulted in shareholders effectively taking control of the board of directors in June.
McClendon is under scrutiny from federal regulators and his board for blurring the line between his personal dealings and that of the company. He was stripped of his title as chairman of the company he co-founded in 1989 last year.
A Reuters investigation published in April found that McClendon had arranged to personally borrow more than $1 billion (620 million pounds) from EIG Global Energy Partners, a firm that also is a big investor in Chesapeake.
The loans, arranged through McClendon's personal shell companies, were secured by his interest in company wells. McClendon is allowed to take a 2.5 percent stake in every single well Chesapeake drills under a controversial program called the Founders Well Participation Program (FWPP).
He must also shoulder the same percentage of the wells' costs. After the Reuters report on McClendon's personal loans, the company's board, at the urging of major shareholders, said in May it would end the well program 18 months early in June 2014.
The FWPP has also come under the scrutiny of the U.S. Securities and Exchange Commission and the Internal Revenue Service and Chesapeake's board.
Other Reuters investigations found McClendon ran a $200 million hedge fund that traded in the same commodities the company produced and plotted with a competitor to suppress prices of oil and gas acreage in Michigan.
The U.S. Department of Justice is investigating Chesapeake's land deals in Michigan.
In each of the prior three years, McClendon received a bonus of nearly $2 million.
Shareholders, who delivered a stringing rebuke of the executive and board in June at the company's annual meeting, have demanded change.
As part of the its efforts to shore up governance, McClendon will also reimburse the company for his personal use of company aircraft in excess of $250,000. Previously that amount was $500,000, according to a filing.
Chesapeake said it will also make deep cuts to other executive's incentive compensation and eliminate their personal use of company jets, according to a filing with the U.S. Securities and Exchange Commission.
The Oklahoma City, Oklahoma company also pledged to implement a shareholder proposal passed in June that would eliminate the staggered election of its board of directors.
Chesapeake originally lobbied for the Oklahoma statute mandating classified boards but said it will now seek to have all of its directors elected on a annual basis, beginning in 2013.
Among other changes, Chesapeake said will adopt a proxy access measure, action New York City Comptroller John Liu said will give shareholders a much stronger voice at the table. New York City pension funds hold 1.6 million Chesapeake shares.
Chesapeake also put in place a clawback provision on executive incentive compensation that can be exercised "in the event that the company is required to restate any financial statements..." filed with the SEC.
Some viewed the changes as relatively minor. Mark Hanson, oil analyst at Morningstar said investors are more keenly focused on the outcome of the company's probe into the FWPP and McClendon's personal loans, as well as the 2013 budget and outlook.
"Cutting overhead and slashing bonuses won't do much for a company that's facing another potential multi-billion funding shortfall in 2013," Hanson said.
Shares of Chesapeake edged lower after the close of regular trading. The stock fell to $17.58 from its New York Stock Exchange close of $17.62.