Chesapeake Energy 2012 Annual Report Download - page 131

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
121
The following reflects our preferred shares outstanding for 2012, 2011 and 2010:
5.75% 5.75% (A) 4.5%
5.00%
(2005B)
5.00%
(2005)
(in thousands)
Shares outstanding at January 1, 2012 and
December 31, 2012 ....................................... 1,497 1,100 2,559 2,096 —
Shares outstanding at January 1, 2011 ............ 1,500 1,100 2,559 2,096 —
Conversion of preferred shares into
common stock ............................................... (3)————
Shares outstanding at December 31, 2011....... 1,497 1,100 2,559 2,096 —
Shares outstanding at January 1, 2010 ............ — — 2,559 2,096 5
Preferred stock issuances ................................ 1,500 1,100 — — —
Conversion of preferred shares into
common stock ............................................... — ——— (5)
Shares outstanding at December 31, 2010 ...... 1,500 1,100 2,559 2,096 —
In 2011 and 2010, shares of our cumulative convertible preferred stock were converted into shares of common
stock as summarized below.
Year of Conversion
Cumulative Convertible
Preferred Stock
Number of
Preferred Shares
Number of
Common Shares
(in thousands)
2011 5.75% 3 111
2010 5% (series 2005) 5 21
There were no gains or losses associated with the conversions noted above.
Dividends
Dividends declared on our common stock and preferred stock are reflected as adjustments to retained earnings
to the extent a surplus of retained earnings will exist after giving effect to the dividends. To the extent retained earnings
are insufficient to fund the distributions, such payments constitute a return of contributed capital rather than earnings
and are accounted for as a reduction to paid-in capital.
Dividends on our outstanding preferred stock are payable quarterly. We may pay dividends on our 5.00%
Cumulative Convertible Preferred Stock (Series 2005B) and our 4.50% Cumulative Convertible Preferred Stock in
cash, common stock or a combination thereof, at our option. Dividends on both series of our 5.75% Cumulative
Convertible Non-Voting Preferred Stock are payable only in cash.
Stock-Based Compensation Plans
Under Chesapeake's Long Term Incentive Plan, restricted stock, stock options, stock appreciation rights,
performance shares, performance share units and other stock awards may be awarded to employees, directors and
consultants of Chesapeake. Subject to any adjustments as provided by the plan, the aggregate number of shares of
common stock available for awards under the plan may not exceed 49,500,000 shares. The maximum period for
exercise of an option or stock appreciation right may not be more than ten years from the date of grant and the exercise
price may not be less than the fair market value of the shares underlying the option or stock appreciation right on the
date of grant. Awards granted under the plan become vested at specified dates or upon the satisfaction of certain
performance or other criteria determined by a committee of the Board of Directors. No awards may be granted under
the plan after September 30, 2014. The plan has been approved by our shareholders. There were 170,151, 68,824
and 87,500 shares of restricted stock issued to our non-employee directors from the plan in 2012, 2011 and 2010,
respectively. Additionally, there were 5.0 million, 4.5 million and 5.8 million restricted shares issued, net of forfeitures,
to employees and consultants during 2012, 2011 and 2010, respectively, from the plan. As of December 31, 2012,
there were 10.7 million shares remaining available for issuance under the plan.