What is the primary reason for Chesapeake Energy implementing these new deferred compensation plans?

Chesapeake Energy is implementing these new plans to comply with the updated guidelines for non-qualified deferred compensation plans as set forth by the American Jobs Creation Act of 2004.

What is the main difference between the new 401(k) Make-Up Plan and the company's existing 401(k) Plan?

The 401(k) Make-Up Plan allows eligible employees to defer additional compensation beyond the limits imposed by the IRS on the standard 401(k) Plan. Additionally, the company offers a 100% match on these deferred amounts, up to 15% of compensation, which is paid in company stock.

Who is eligible to participate in the new deferred compensation plans?

Eligibility varies. For the 401(k) Make-Up Plan, employees need at least five years of service and minimum annual base salary and bonus compensation of $95,000. For the Deferred Compensation Plan, employees need at least one year of service and the same minimum compensation threshold. Executive officers are eligible for both. Non-employee directors are also eligible for the Deferred Compensation Plan.

Are the amounts deferred under these new plans guaranteed by Chesapeake Energy?

No, the new deferred compensation plans are unsecured. Any compensation deferred under these plans represents a general obligation of the company, meaning participants are general creditors of Chesapeake Energy with respect to these amounts.

EXPAND ENERGY Corp 8-K: Material Agreements

Summary

Chesapeake Energy Corporation (EXE) filed an 8-K on December 22, 2004, to announce the implementation of two new non-qualified deferred compensation plans, effective January 1, 2005. These plans are in direct response to new guidelines established by the American Jobs Creation Act of 2004. The company will continue to operate its existing deferred compensation plans, but no new deferrals will be accepted into them once the new plans are active. This move aims to provide employees with enhanced options for deferring compensation in compliance with the updated legislation. The key additions are the "401(k) Make-Up Plan" and the "Deferred Compensation Plan." The 401(k) Make-Up Plan allows eligible employees to defer additional compensation beyond the IRS limits applicable to the standard 401(k) Plan, with the company offering a 100% match up to 15% of compensation, payable in company stock. The Deferred Compensation Plan allows eligible employees and non-employee directors to defer a significant portion of their salary, bonus, or director compensation. Both new plans have specific eligibility criteria related to service length and minimum compensation, and importantly, these plans represent unsecured obligations of the company.

Key Highlights

1Chesapeake Energy Corporation is launching two new non-qualified deferred compensation plans effective January 1, 2005, in compliance with the American Jobs Creation Act of 2004.
2Existing deferred compensation plans will cease accepting new deferrals upon the commencement of the new plans.
3The "401(k) Make-Up Plan" allows participants to defer compensation exceeding standard 401(k) limits.
4The company will provide a matching contribution of 100% (up to 15% of compensation) for the 401(k) Make-Up Plan, paid in company common stock.
5The "Deferred Compensation Plan" permits eligible employees and non-employee directors to defer a substantial portion of their base salary, bonuses, or director fees.
6Eligibility for the new plans is contingent on factors such as years of service and minimum annual base salary and bonus compensation of $95,000.
7Deferred amounts under these new plans are unsecured and participants are considered general creditors of the company.

EXPAND ENERGY Corp 8-K Report, Material Agreement (Dec 22, 2004)

Summary

Key Highlights

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