CHESAPEAKE ENERGY CORP appointed Domenic J. Dell'Osso, Jr. as new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 


Appointment of Chief Executive Officer


On October 11, 2021, Chesapeake Energy Corporation (the "Company") announced that the Board of Directors of the Company (the "Board") appointed Domenic J. Dell'Osso, Jr. as President and Chief Executive Officer of the Company and as a member of the Board, effective October 11, 2021. Additionally, Mr. Dell'Osso will remain in his role as Chief Financial Officer of the Company until his replacement has been announced. There are no transactions between the Company and Mr. Dell'Osso that would require disclosure under Item 404(a) of Regulation S-K. There are no family relationships between Mr. Dell'Osso and any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company within the meaning of Item 401(d) of Regulation S-K. Further, there is no arrangement or understanding between Mr. Dell'Osso and any other persons pursuant to which Mr. Dell'Osso was selected as an officer and director.


As President and Chief Executive Officer, Mr. Dell'Osso will receive an annualized base salary of $800,000, effective as of October 11, 2021, and will be eligible to receive an annual target bonus equal to 100% of his base salary for 2021 and 125% of his base salary in 2022, in each case, with an opportunity to earn a bonus of 200% of target at maximum performance levels. In addition, the table below sets forth the Mr. Dell'Osso's restricted stock units, performance stock units that vest based on the Company's absolute total shareholder return ("TSR") and performance stock units that vest based on the Company's relative TSR that he will receive in consideration of his 2021 service as President and Chief Executive Officer and Chief Financial Officer, pursuant to the Company's 2021 Long Term Incentive Plan. In 2022, it is expected that Mr. Dell'Osso will receive equity awards with a grant date value of $4,700,000. All other terms of Mr. Dell'Osso's employment will remain the same until the term of his existing employment agreement expires on December 31, 2021, at which point Mr. Dell'Osso will begin participating in the Executive Severance Plan (as defined below) as a Tier 1 Executive, as described below.


Awards for Service as Chief Financial Officer Awards for Service as President and Chief Executive Officer 

 Restricted Stock Units 14,861, which vest one-third on each of October 11, 2022, May 28, 2023 and May 28, 2024 2,119, which vest one-third on each of October 11, 2022, 2023 and 2024 

 Performance Stock Units (absolute TSR) 29,722 at 100% payout level, which cliff vest in full or in part on May 28, 2024 based on absolute TSR from February 10, 2021 to December 29, 2023 4,237 at 100% payout level, which cliff vest in full or in part on October 11, 2024 based on absolute TSR from September 30, 2021 through September 30, 2024 

 Performance Stock Units (relative TSR) 14,861 at 100% payout level, which cliff vest in full or in part on May 28, 2024 based on relative TSR from February 10, 2021 to December 29, 2023 2,119 at 100% payout level, which cliff vest in full or in part on October 11, 2024 based on relative TSR from September 30, 2021 through September 30, 2024 


Appointment of New Executive Chairman


On October 11, 2021, the Board of the Company appointed Michael A. Wichterich, who resigned as Interim Chief Executive Officer upon the appointment of Mr. Dell'Osso, as Executive Chairman of the Company.


As Executive Chairman of the Company, Mr. Wichterich will receive an annualized base salary of $650,000 and annual equity awards with an aggregate grant date value based on $2,000,000 per annum (net of the $350,000 Mr. Wichterich was paid as Non-Executive Chairman of the Board in respect of his services through May 20, 2022). The equity awards set forth in the table below are being granted in consideration of Mr. Wichterich's service as Executive Chairman in 2021, pursuant to the Company's 2021 Long Term Incentive Plan. The foregoing terms, among other terms and conditions of Mr. Wichterich's service as Executive Chairman, are set forth in a letter agreement that the Company entered into with Mr. Wichterich, a copy of which is attached hereto as Exhibit 10.4 and incorporated herein by reference.


Restricted Stock Units 1,520, vest one-third on each of October 11, 2022, 2023 and 2024 

 Performance Stock Units (absolute TSR) 3,040 at 100% payout level, cliff vest in full or in part on October 11, 2024 based on absolute TSR from September 30, 2021 through September 30, 2024 

 Performance Stock Units (relative TSR) 1,520 at 100% payout level, cliff vest in full or in part on October 11, 2024 based on relative TSR from September 30, 2021 through September 30, 2024 


Executive Severance Plan


On October 11, 2021, the Board adopted the Chesapeake Energy Corporation Executive Severance Plan (the "Executive Severance Plan"). To participate in the Executive Severance Plan, the Company's executive officers and other eligible employees must enter into participation agreements pursuant to the Executive Severance Plan in which they will (i) agree to terminate their employment agreement with the Company, to the extent they are a party to such an agreement, provided that certain confidentiality and non-solicitation covenants included in the employment agreement will survive such termination and (ii) become eligible to receive the severance benefits provided for under the Executive Severance Plan, pursuant to the terms and conditions of the Executive Severance Plan. Our President and Chief Executive Officer, Mr. Dell'Osso, is not currently eligible to participate in the Executive Severance Plan while the term of his existing employment agreement remains in effect. It is anticipated that Mr. Dell'Osso will begin participating in the Executive Severance Plan effective as of January 1, 2022. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Executive Severance Plan.


Upon a Qualifying Termination outside of a Change in Control Protection Period, participants in the Executive Severance Plan will be eligible to receive the following benefits:


· a cash payment equal to 2.0 (for Tier 1 Executives) and 1.0 (for Tier 2 and Tier 3 Executives) times the sum of the participant's (i) annualized Base Salary then in effect and (ii) Target Annual Bonus, payable in substantially equal installments on the Company's regular payroll schedule for the period commencing on the participant's applicable period (24 months for Tier 1 Executives and 12 months for Tier 2 and Tier 3 Executives); and 


· a lump sum cash payment equal to the product of (i) 12 and (ii) the monthly amount of the Company's contribution to the premiums for such participant's group health plan coverage (including coverage for such participant's spouse and eligible dependents), determined under the Company's group health plans as in effect immediately prior to the date of the termination of such participant's employment. 


Upon a Qualifying Termination during a Change in Control Protection Period, participants in the Executive Severance Plan will be eligible to receive the following benefits:


· a lump sum cash payment equal to 3.0 (for Tier 1 Executives), 2.0 (for Tier 2 Executives) and 1.0 (for Tier 3 Executives) times the sum of the participant's (i) annualized Base Salary then in effect and (ii) Target Annual Bonus; and 


· a lump sum cash payment equal to the product of (i) 12 and (ii) the monthly amount of the Company's contribution to the premiums for such participant's group health plan coverage (including coverage for such participant's spouse and eligible dependents), determined under the Company's group health plans as in effect immediately prior to the date of the termination of such participant's employment. 


In order to receive any of the foregoing severance benefits under the Executive Severance Plan, a participant must timely execute (and not revoke) a release of claims in favor of the Company and its affiliates. Further, the Executive Severance Plan requires continued compliance with certain confidentiality, non-solicitation and non-disparagement covenants. If the severance benefits under the Executive Severance Plan would trigger an excise tax for a participant under Section 4999 of the Internal Revenue Code of 1986, as amended, the Executive Severance Plan provides that the participant's severance benefits will be reduced to a level at which the excise tax is not triggered, unless the participant would receive a greater amount without such reduction after taking into account the excise tax and other applicable taxes.


The foregoing description of the Executive Severance Plan and the participation agreements thereunder is not complete and is qualified in its entirety by reference to the full text of the Executive Severance Plan and the form of such participation agreements, which are attached hereto as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated herein by reference.


Amendment to 2021 Long Term Incentive Plan


On October 11, 2021, the Board approved an amendment to the Company's 2021 Long Term Incentive Plan to revise the definition of "Change of Control." A copy of the amendment is attached hereto as Exhibit 10.3.