* Canadian fund to withhold vote to re-elect 3 directors
* Latest sign of discontent with CEO Aubrey McClendon
* Chesapeake shares fall 1.55 pct to $22.92
NEW YORK, June 8 A major shareholder in
Chesapeake Energy Corp (CHK.N) fired another blast at the gas
producer on Monday, saying it would withhold its vote to
re-elect directors because of bonuses paid to Chief Executive
The move was the latest sign of shareholder discontent with
McClendon, who was the highest-paid executive in the United
States last year despite the steep drop in Chesapeake's share
price and worries that it had taken on too much debt buying
The Ontario Teachers Pension Plan, which had $87.4 billion
in total assets and owned 1.1 million Chesapeake shares at the
end of 2008, filed a lawsuit against Chesapeake last month
after the company awarded McClendon a $75 million bonus payment
and agreed to buy a collection of historical maps from him for
The Canadian fund cited recommendations from proxy firm
Glass Lewis & Co in its decision to withhold re-election votes
for three directors.
"It appears to us that many aspects of Mr. McClendon's
compensation arrangements for 2008 were designed to soften the
blow of his personal losses rather than link pay with
performance," Glass Lewis said in its recommendation to
Chesapeake's shareholder meeting is scheduled for Friday.
McClendon, who founded the company and is one of the
industry's most visible proponents of natural gas, was forced to
sell 94 percent of his Chesapeake shares amounting to 6 percent
of its outstanding stock last year to meet margin calls.
The lawsuit also contends that Chesapeake admitted in
response to a Securities and Exchange Commission inquiry that
McClendon's bonus and new contract were motivated by the margin
calls, and that three other directors sold $5.2 million in stock
shortly before McClendon's cash problems were disclosed.
Chesapeake declined to comment on the statement from the
Ontario Teachers Pension Fund, and referred to earlier
statements that cited McClendon's "extraordinary contribution"
to the company deals that added $10 billion in "intrinsic
value" to the company.
McClendon's bonus was linked to provisions that give him 5
percent ownership of the company's wells, but require him to
help fund their development.
Chesapeake's stock has jumped 40 percent so far this year,
but remains far below its peak from 2008, when it shed 60
percent of its value, far worse than the 35 percent drop in the
American Stock Exchange's natural gas companies index .XNG.
Earlier on Monday, Indigo Minerals LLC said it had bought
gas assets worth $218 million from Chesapeake. [ID:nWNAB7511]
Shares of Chesapeake were down 36 cents or 1.6 percent at
$22.92 late on Monday on the New York Stock Exchange.
(Reporting by Matt Daily; editing by Matthew Lewis)