Chesapeake Energy or Chesapeake Air?

May 2, 2011

First, we’ll cut to the chase: Chesapeake Energy (CHK) doesn’t seem to be buying any more $12.1-million antique map collections. Despite that, there’s still plenty to see in the proxy that the company filed a few minutes before the SEC’s 5:30 p.m. filing deadline on Friday.

Chesapeake, of course, is something of a frequent flier here at footnoted, and this year’s proxy didn’t disappoint. Jack Smith at the Fort Worth Star-Telegram already laid out the big paycheck Chairman and Chief Executive Aubrey K. McClendon raked in. But perks for the executives are eye-opening in themselves.

McClendon (of map-collection fame) got $500,000 in personal use of the corporate jet, plus another $250,000 in “costs related to personal accounting support provided to Mr. McClendon by our employees, net of reimbursement.” He also got another $119,135 for “personal security” for himself and his family — not quite Jeff Bezos-level security, but presumably enough to keep him sleeping soundly. Other execs got financial advisory services, monthly country-club dues, and even retrofitting for their personal vehicles to run on natural gas.

Not that the company seems to worry about its carbon footprint when it comes to jetting executives around. It turns out that Chesapeake is running something of an airline for its top brass. Former Chief Financial Officer Marcus Rowland — whose not-going-far retirement we footnoted in October — actually used the plane more than McClendon, to the tune of $684,302 in the 10 months of last year that he worked for Chesapeake. Altogether, Chesapeake’s six top executives (including McClendon and Rowland) got flight benefits worth some $2 million.

One of the more striking aspects of Chesapeake’s generosity with its jets is that it actually seems to rent them on a fractional basis — so presumably the company doesn’t have the jet sitting around and might as well let the executives use it; more flying costs more money. So if the executives were content to buy their own tickets, you’d expect the company and shareholders to save real money. (Just for context, $2 million is almost a full 1% of the company’s net income for the most recent quarter: Not vast sums for a company Chesapeake’s size, perhaps, but a surprisingly large amount to fly individuals around for personal business.)

Then there’s the perennial overlap between McClendon’s extracurricular investment in the Oklahoma City Thunder basketball team (he owns 19.2% of it) and the company’s sponsorship of the team — to the tune of nearly $6 million ($400,000 for home playoff games, and $5.5 million for regular-season home games. The company says it does this to be a top-notch employer in town, just as it sponsors other teams:

“The Company also supports the professional baseball and hockey teams based in Oklahoma City because the Company values the cohesiveness that professional sports teams have brought to the central Oklahoma community.”

In 2009, the company apparently spent $3.8 million sponsoring the Thunder, and (as we footnoted a year ago) predicted that its 2010 spending would surpass $1.5 million. (They got that much right, anyway.)

Who’s minding the store through all of this? Some of the best-paid directors we’ve seen in a while, with total pay ranging from $248,670 (for a director who served only part of the year) to $623,443. In fact, just one of the company’s eight directors made less than $400,000 last year, and five made more than $500,000. Part of their pay: personal use of the corporate jet, ranging from $11,487 to $175,318 apiece.

That’s a lot of time spent in mid-air. Perhaps the view from up there is different.

Image source: Chesapeake website

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