Chesapeake Energy 1997 Annual Report Download - page 66

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Stockholders' Equity And Stock Based Compensation
On December 2, 1996, the Company completed a public offering of 8,972,000 shares of Common Stock
at a price of $33.63 per share, which resulted in net proceeds to the Company of approximately $288.1 million.
On April 12, 1996 the Company completed a public offering of 5,989,500 shares of Common Stock at a
price of $17.67 per share, resulting in net proceeds to the Company of approximately $99.4 million.
A 2-for-1 stock split of the Common Stock in December 1994, a 3-for-2 stock split of the Common Stock
in December 1995 and June 1996, and a 2-for-i stock split of the Common Stock in December 1996 have
been given retroactive effect in these financial statements.
Stock Option Plans
Under the Company's 1992 Incentive Stock Option Plan (the "ISO Plan"), options to purchase
Common Stock may be granted only to employees of the Company and its subsidiaries. Subject to any
adjustment as provided by the ISO Plan, the aggregate number of shares which may be issued and sold may
not exceed 3,762,000 shares. The maximum period for exercise of an option may not be more than 10 years
(or five years for an optionee who owns more than 10% of the Common Stock) from the date of grant, and the
exercise price may not be less than the fair market value of the shares underlying the options on the date of
grant (or 110% of such value for an optionee who owns more than 10% of the Common Stock). Options
granted become exercisable at dates determined by the Stock Option Committee of the Board of Directors.
No options may be granted under the ISO Plan after December 16, 1994.
Under the Company's 1992 Nonstatutory Stock Option Plan (the "NSO Plan"), non-qualified options to
purchase Common Stock may be granted only to directors and consultants of the Company. Subject to any
adjustment as provided by the NSO Plan, the aggregate number of shares which may be issued and sold may
not exceed 3,132,000 shares, The maximum period for exercise of an option may not be more than 10 years
from the date of grant, and the exercise price may not be less than the fair market value of the shares
underlying the options on the date of grant. Options granted become exercisable at dates determined by the
Stock Option Committee of the Board of Directors. No options may be granted under the NSO Plan after
December 10, 2002.
Under the Company's 1994 Stock Option Plan (the "1994 Plan"), and its 1996 Stock Option Plan (the
"1996 Plan"), incentive and nonqualified stock options to purchase Common Stock may be granted to
employees of the Company and its subsidiaries. Subject to any adjustment as provided by the respective plans,
the aggregate number of shares which may be issued and sold may not exceed 4,886,910 shares under the 1994
Plan and 6,000,000 shares under the 1996 Plan. The maximum period for exercise of an option may not be
more than 10 years from the date of grant, and the exercise price may not be less than the fair market value of
the shares underlying the options on the date of grant. Options granted become exercisable at dates
determined by the Stock Option Committee of the Board of Directors. No options may be granted under the
1994 Plan after December 16, 2004 or under the 1996 Plan after October 14, 2006.
The Company has elected to follow APB No. 25, Accounting for Stock Issued to Employees and related
Interpretations in accounting for its employee stock options. Under APB No. 25, compensation expense is
recognized for the difference between the option price and market value on the measurement date. No
compensation expense has been recognized because the exercise price of the stock options equaled the market
price of the underlying stock on the date of grant.
Pro forma information regarding net income and earnings per share is required by SFAS No. 123 and has
been determined as if the Company had accounted for its employee stock options under the fair value method
of the Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for fiscal 1997 and 1996, respectively:
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