(Reuters) - Chesapeake Energy Corp often boasts that it's one of America's best workplaces, offering its 13,500 employees such benefits as Botox injections, NBA tickets and a fitness center with an Olympic-sized pool and a rock-climbing wall.
What the company hasn't disclosed is perhaps the most extraordinary perk of all: A group of about 1,600 employees is guaranteed a unique type of payment if the company changes hands, internal Chesapeake documents reviewed by Reuters show.
The provision is included as boilerplate contract language for almost 12 percent of the company's workforce, mainly mid-level employees. If control of the company changes, the change obligates Chesapeake to pay the group a total of at least $100 million and as much as $140 million in cash.
The 1,600 employees represent positions across the company and its subsidiaries, the documents show. They include title attorneys, land men, lab technicians and senior security officers - not simply top executives who typically receive so-called golden parachutes.
Perhaps most unusual, the Chesapeake employees would be entitled to these "change-of-control" payments even if they kept their jobs at Chesapeake after the company changed hands. For some employees, that means cash payments of 50 percent of their salary plus 50 percent of their most recent annual bonus, according to contracts examined by Reuters.
The scope and particulars of Chesapeake's change-of-control payments program - like some of the perks offered to its embattled CEO, Aubrey McClendon - surprised industry analysts, who say the percentage of employees eligible for the perk is unusually high. The company is under no obligation to disclose the information to shareholders because most of those with the provision are not top executives.
Some company employees and analysts have begun to ask whether board changes in June already have triggered the change-in-control provision in their contracts. Chesapeake spokesman Michael Kehs said they do not.
Kehs would not discuss the rationale behind the contract provisions - or why the approximately 1,600 workers have the clause in their contracts. But he did say it "dates back to 2003."
Such provisions might be used to lure prospective hires. Chesapeake has worked hard to draw skilled people to Oklahoma City, which lacks some of the amenities of larger cities. The provisions also provide an added measure of job security, especially for workers with decades of experience.
Chesapeake requires only a change of control of the company for employees to be eligible for the windfall - the "single-trigger" - but most Fortune 100 companies use a "double-trigger." That's means employees have to also lose their jobs before they get the payment. According to 95 of the companies queried by the consulting firm Equilar, only two of those surveyed employed a modified single trigger in 2010, the most recent year the question was asked.
"These things usually have a double trigger - there is a takeover, employees lose their jobs, then they get paid," said David Larcker, an accounting professor at Stanford Graduate School of Business.
Michael Garland, head of corporate governance for New York City, agreed. New York City holds almost 2 million shares of Chesapeake stock.
"The only rationale for a single trigger is to provide a windfall to management at shareowners' expense, which is why they are increasingly rare," Garland said.
Garland and others suggested the clause could act as a "poison pill," a provision that deters takeover attempts.
"In the takeover era, it was common to have poison pills," said Charles Elson, a governance expert at the University of Delaware. "The key was to make it more expensive to take a company over. It would be unusual today to have broad-based single-trigger change of control payments. The only reason you would have those would be to make it more expensive to take over a company."
But the estimated $100 million to $140 million in potential payouts is a small fraction of the company's $13 billion market capitalization, and the clause may simply reflect the largesse at Chesapeake, America's second-largest natural gas producer.
In recent years, investors have waged successful battles to dismantle most of corporate America's generous change-of-control provisions. They contend that single triggers set the bar too low for a payout and destroy shareholder value.
Companies argue that golden parachutes are needed to retain executives who should weigh every takeover fully without fear of losing their jobs. It isn't clear, however, why Chesapeake offers this sort of perk to such a wide range of employees, few of whom are high-ranking executives.
Rocked by a corporate-governance crisis, Chesapeake has undergone major changes to its board of directors.
Recent Reuters investigations revealed that McClendon has borrowed more than $1 billion against his personal stakes in company oil and gas wells and ran a $200 million hedge fund inside the company. In June, Reuters cited email discussions between Chesapeake and Canadian energy giant Encana Corp in which the two rivals plotted to suppress land prices in Michigan in 2010.
The reports have triggered inquires by the U.S. Department of Justice, the Internal Revenue Service and the Securities and Exchange Commission.
In June, McClendon was stripped of his title as Chesapeake chairman. Investors Carl Icahn and Mason Hawkins won control of the board, and Archie Dunham, former chairman of ConocoPhillips, was named independent chairman. As a result, five new members now constitute a majority of the board's nine members.
To fill a financing gap estimated to be as much as $10 billion this year, Chesapeake has pledged to sell up to $11.5 billion in assets in 2012. Some analysts believe that Icahn, Hawkins and Dunham are preparing Chesapeake for sale. The company holds rich oil and gas acreage but lacks the capital to develop it.
The agreements for the 1,600 mid-level employees state that they are entitled to a lump sum payout if the incumbent board members "cease for any reason to constitute at least a majority of the board of directors."
The contract language adds that a routine change in the board of directors does not constitute a change-of-control, but that the perk would be triggered if the new board members obtain their seats "as a result of an actual or threatened election contest."
Some Chesapeake employees in Oklahoma City have asked managers whether the board changes in June triggered the contract clause - and if so, when they will get their payments. "We've been told that there's been no change of control, but a lot of us are still curious how this is all going to play out," said one mid-level Chesapeake employee with the contract provision who earns a low six-figure annual salary.
Spokesman Kehs said that, "under these agreements, in the absence of an actual or threatened election or proxy contest, there is no change of control if the new directors are approved by the then existing directors, and that is what happened here."
Paul Hodgson, senior research associate at GMI Ratings, a corporate-governance consulting firm, disagreed, saying the change-in-control trigger "in fact has already happened with the new directors."
(Reporting By Anna Driver in Houston, John Shiffman in Oklahoma City, Brian Grow in Atlanta; Additional reporting by Janet Roberts from New York; editing by Blake Morrison and Michael Williams.)
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