Two Pension Plans Challenge Energy Firm CEO Bonus

May 11, 2009 ( - Two Louisiana pension funds have gone to court to challenge a $75-million 2008 bonus given to Chesapeake Energy CEO Aubrey McClendon.

A Gannett news service said the bonus brought McClendon’s compensation to $112.5 million, which an Associated Press calculation determined to be the highest for a CEO among Standard & Poor’s 500 companies.

Starting legal actions to challenge the move were The New Orleans Employees’ Retirement System as well as the Louisiana Municipal Police Employee Retirement System.

Marc Gross, attorney for the police pension fund, said last week that the organization is going to court on the premise that it should be allowed to see the books and records of Chesapeake at the time of the bonus award “so we can make a determination there was a fully informed decision by the board approving that package, and whether or not it was on a reasonable basis,” the Gannett report indicated.

Last week, Chesapeake released its first-quarter financial report, which stated that the Oklahoma City-based company lost nearly $6 billion for the quarter that ended March 31, compared to a loss of $132 million in the same period in 2008.

Gross said the Louisiana pension would not necessarily be trying to recover Chesapeake losses in 2008 but the legal action is more of an issue of corporate governance. The police retirement system is “saying management is accountable to us and should not be draining money … unless it has a good reason for doing so,” Gross said, according to the news report.