Chesapeake Energy 2014 Annual Report Download - page 141

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
133
18. Restructuring and Other Termination Costs
On June 30, 2014, we completed the spin-off of our oilfield services business through a pro rata distribution of
SSE common stock to holders of Chesapeake common stock. In connection with the spin-off, in 2014, we incurred
restructuring charges of $15 million consisting of transaction costs, stock-based compensation adjustments and debt
extinguishment costs. See Note 13 for further discussion of the spin-off.
On September 9, 2013, we committed to a workforce reduction plan as part of a company-wide reorganization
effort intended to reduce costs. The reduction was communicated to affected employees on various dates within the
months of September and October, and all notifications were completed by October 11, 2013. The plan resulted in a
reduction of approximately 900 employees. In connection with the reduction, we incurred a charge of approximately
$66 million.
On April 1, 2013, Aubrey K. McClendon, the co-founder of the Company, ceased serving as President and CEO
and as a director of the Company pursuant to his agreement with the Board of Directors announced on January 29,
2013. Mr. McClendon’s departure from the Company was treated as a termination without cause under his employment
agreement. On April 18, 2013, the Company and Mr. McClendon entered into a Founder Separation and Services
Agreement, effective January 29, 2013, regarding his separation from employment and to facilitate the relationship
between the Company and Mr. McClendon as joint working interest owners of oil and gas wells, leases and acreage.
In 2013, we incurred charges of approximately $69 million related to Mr. McClendon’s departure.
During 2013, we also incurred charges of approximately $50 million related to other workforce reductions, including
separations of executive officers other than the former CEO. Substantially all of the restructuring and other termination
costs in 2013 are in the exploration and production operating segment.
In December 2012, Chesapeake announced that it had offered a voluntary separation program (VSP) to certain
employees as part of the Company's ongoing efforts to improve efficiencies and reduce costs. The VSP was offered
to approximately 275 employees who met criteria based upon a combination of age and years of Chesapeake service,
and 211 accepted prior to the expiration of the offer in February 2013. We recognized the expense related to their
termination benefits over their remaining service period, which resulted in $63 million of expense for 2013.