01—Abstract
Summary
Summary of the 10-K/A filed October 28, 1997. Cited figures are marked; the original filing is the authoritative source.
This is Amendment No. 1 (Form 10-K/A) to the annual report of Chesapeake Energy Corporation (Oklahoma City, NYSE: CHK) for the fiscal year ended June 30, 1997.
The filing does not match the request in two respects: the registrant is Chesapeake Energy Corporation, not Expand Energy Corp (EXE), and the document contains only Part III (directors, executive compensation, security ownership, and related-party transactions). It contains no financial statements, revenue, earnings, reserve, or balance sheet data, so it cannot support a financial performance assessment. The amendment reports 70,429,017 common shares outstanding and an aggregate non-affiliate market value of $423.9 milliona as of October 27, 1997.
The stock closed at $9.94b on June 30, 1997. The main investor-relevant content concerns governance and insider economics. Co-founders Aubrey K.
McClendon (Chairman and CEO) and Tom L. Ward (President and COO) together beneficially own roughly 31% of the company, and directors and executive officers as a group hold about 42% including options. Both have three-year employment agreements starting July 1, 1997, with base salaries of at least $300,000,c and both may participate in company wells, with individual working interests capped at 2.5%.
Their agreements include a 36-month severance payment following a change of control, which is defined to include acquisition of 35% or more of voting power. Several insiders filed Forms 4 late, and one director's option exercise was reported late. For investors, the filing points to concentrated insider control, related-party exposure (including roughly $207,000d in fiscal 1997 legal fees paid to a director's law firm and joint-interest receivables from the founders), and a notable management change: Marcus C.
Rowland became Senior Vice President of Finance and CFO in September 1997. A full evaluation would require the original 10-K with financial statements and reserve disclosures.
02—Key points
Key Highlights
- Filing identity: Form 10-K/A (Amendment No. 1) for Chesapeake Energy Corporation, fiscal year ended June 30, 1997. The filing covers Part III only and contains no financial statements, so the 'Expand Energy' label in the request does not match the document.
- Shares and market value: 70,429,017 common shares outstanding; non-affiliate market value of $423,923,486 as of October 27, 1997; closing price of $9.94 on June 30, 1997.
- Insider concentration: Aubrey McClendon (about 15%) and Tom Ward (about 16%) are the largest holders. All directors and officers as a group beneficially own about 42% including exercisable options.
- Founder employment terms: three-year agreements from July 1, 1997, with base salaries of at least $300,000, bonuses at board discretion, and well-participation rights capped at 2.5% working interest per well.
- Change-of-control protection: 36 months of base salary severance for McClendon, Ward, and Rowland if terminated or demoted within one year of a change of control, which includes acquisition of 35% or more of voting power.
- Governance and disclosure: Board of seven directors with staggered terms; several officers filed Forms 4 late, and related-party legal fees of about $207,000 were paid to a director's law firm in fiscal 1997.
- Management change: Marcus C. Rowland was named Senior Vice President of Finance and Chief Financial Officer in September 1997, succeeding his prior VP-Finance and CFO role.
03—Questions
Frequently Asked Questions
Does this filing include financial results such as revenue, earnings, or reserves?
No. This 10-K/A amends only Part III (directors, executive compensation, security ownership, and certain transactions). Financial statements, MD&A, and reserve data would be in the original 10-K, which is not included here.
How much control do the company's founders have?
Tom Ward and Aubrey McClendon are the largest shareholders, holding about 16% and 15% respectively. Together with other directors and officers, insiders control about 42% of shares including exercisable options, which gives them substantial influence over board and shareholder votes.
What compensation and severance protections do top executives have?
McClendon and Ward each have three-year employment agreements from July 1, 1997, with base salaries of at least $300,000 and automatic annual extensions. If a change of control occurs and the executive is terminated or demoted within one year, they receive 36 months of base salary. Their working-interest participation in company wells is capped at 2.5% per well, and they must hold company stock worth 500% of salary and bonus.
Are there related-party transactions investors should note?
Yes. A director, Shannon Self, is a shareholder in a law firm that billed the company about $207,000 in fiscal 1997. The founders also participate in company wells as working-interest owners, and their joint-interest balances were about $3.6 million (McClendon) and $3.0 million (Ward) at June 30, 1997. The company also pays some expenses on their behalf, though the amounts were described as insignificant.
Were there any compliance issues with insider reporting?
Yes. Several executive officers (Rowland, Dixon, Lester, Hood, Lefaive, and Burger) filed Forms 4 late to report option cancellations and failed to timely report replacement option grants on Form 5. Director Shannon Self also filed a late Form 4 for an option exercise and related share disposition.
04—Continue