Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 30, 2021, the Board of Directors (the “Board”) of Chesapeake Energy Corporation (the “Company”) announced the appointment Mohit Singh as the Company’s Executive Vice President and Chief Financial Officer, effective as of December 6, 2021. Since February 2015, Mr. Singh, age 44, served on the executive leadership team at BPX Energy, the United States onshore subsidiary of BP, in a variety of positions of increasing responsibility. Mr. Singh most recently served as BPX Energy’s Head of M&A, Corporate Land & Reserves beginning in September 2020 and previously served as Head of Business Development and Exploration and Senior Vice President North Business Unit. Prior to joining BPX Energy, Mr. Singh served as a Director of RBC Capital Markets – Richardson Barr from June 2013 through February 2015, as a Vice President and an Associate at Goldman Sachs – Global Natural Resources Investment Banking Division from June 2008 through May 2013, and in various business planning reservoir/research engineering roles at Shell Exploration and Production Company from September 2001 through April 2008. Mr. Singh holds an MBA from the University of Texas at Austin, a PhD in Chemical Engineering from the University of Houston, and a BTech in Chemical Engineering (with a minor in Environmental Engineering) from the Indian Institute of Technology.
In connection with Mr. Singh’s appointment as Executive Vice President and Chief Financial Officer of the Company, the Compensation Committee of the Board (the “Compensation Committee”), approved the following compensation terms:
•Base Salary. Mr. Singh will receive an initial annualized base salary of $525,000 (“Base Salary”).
•Bonus. Mr. Singh will be eligible for an annual cash bonus on the same basis as other executive officers under the Company’s then-current annual incentive plan, beginning in fiscal year 2022. Mr. Singh’s annual bonus opportunity payable at achievement of target and maximum levels will be 100% and 200%, respectively, of Base Salary.
•Annual Equity Compensation. Mr. Singh will be eligible for annual grants of equity-based incentive awards under the Company’s Long Term Incentive Plan beginning in March of 2022. For fiscal year 2022, Mr. Singh will receive equity incentive awards with an aggregate grant date target fair value of $2,050,000, consisting of $512,500 (25%) of restricted stock units (“RSUs”) and $1,537,500 (75%) of performance share units (“PSUs”), each vesting in three equal annual installments beginning on the first anniversary of the grant date, subject to Mr. Singh’s continued employment with the Company through the applicable vesting date, with the number of RSUs and PSUs to be based on the weighted average price of the Company’s common stock price over the 30 day period ending on the day prior to the grant date (the “30-day VWAP”). Mr. Singh’s PSUs will have a target value of $1,537,500, with a potential maximum value of $3,075,000. The terms and conditions of the RSUs and PSUs will otherwise be consistent with the equity incentive awards that are granted to other members of the Company’s senior management team.
•Signing Bonus and Inducement Equity Award. As an inducement for Mr. Singh to accept the Company’s offer of employment and in recognition of Mr. Singh’s unvested BPX Energy equity awards, which Mr. Singh forfeited to assume employment with the Company, Mr. Singh will receive: (i) a cash signing bonus of $880,000, subject to a one-year clawback provision; and (ii) RSUs with an aggregate grant date fair value of $1,720,000, based on the 30-day VWAP, with 25% of the RSUs vesting on each of January 1, 2023 and January 1, 2024 and 50% of the RSUs vesting on January 1, 2025, in each case, subject to Mr. Singh’s continued employment with the Company through the applicable vesting date.
•Severance. Mr. Singh will be a Tier 2 participant in the Company’s Executive Severance Plan that was previously disclosed and attached to the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2021.
•Clawbacks. Mr. Singh’s incentive compensation will be subject to the Company’s clawback policies applicable to all executive officers of the Company in effect from time to time and applicable law.
The Company will also enter into a standard Indemnity Agreement with Mr. Singh, a form of which was filed with the SEC on February 9, 2021 as Exhibit 10.6 to the Company’s Current Report on Form 8-K. Pursuant to this agreement, subject to the exceptions and limitations provided therein, the Company will indemnify Mr. Singh for obligations he may incur in his capacity as an officer, as authorized by the Company’s restated certificate of incorporation.
The Company is not aware of any arrangement or understanding between Mr. Singh and any other person pursuant to which he was appointed as an officer. Mr. Singh does not have any family relationships with any of the Company’s directors or executive officers or a direct or indirect material interest in any transaction or series of similar transactions that would require disclosure under Item 404(a) of Regulation S-K.
Upon the commencement of Mr. Singh’s employment, Domenic J. Dell’Osso, Jr. will cease to serve as the Company’s Chief Financial Officer, but he will continue to serve as the Company’s President and Chief Executive Officer.