Is Chesapeake Energy Corporation (CHK)’s New CEO Overpaid?

Meanwhile, John Richels of Devon Energy Corp (NYSE:DVN), an energy producer with a market cap of nearly $22.5 billion, took home $12.8 million last year, not including the rise in the value of his pension. Even Ryan Lance, who heads up ConocoPhillips (NYSE:COP), which has a market cap more than five times that of Chesapeake’s, only took home $19.3 million last year.

In fact, Lawler’s $22 million package is even more than the $20.8 million SandRidge Energy Inc. (NYSE:SD)’s CEO Tom Ward – who has come under heavy fire for his alleged failings in leading the company he founded – took home last year. Despite SandRidge’s lackluster earnings growth and dismal stock performance, Ward got a total compensation of $25.2 million in 2011, which placed him among the highest-paid energy CEOs that year.

Is Lawler overpaid?
Though compensation comparisons may suggest otherwise, the generous pay package offered to Lawler may simply reflect how difficult it has been for Chesapeake Energy Corporation (NYSE:CHK) to find someone to replace McClendon.

Clearly, he left the company in a pretty precarious position, with a worryingly high level of long-term debt and a sizable cash flow shortfall. To combat these problems, Chesapeake has been forced to sell a ton of assets in a short period of time. Low natural gas prices and disappointing prices for some of its assets have further exacerbated the company’s woes.

Given this backdrop, the $2 million cash signing bonus and $12.5 million of shares awarded to Lawler may have been necessary to attract the caliber of executive the company needs to help it bounce back, especially after earlier talks between the company and a promising candidate quickly fizzled out.

The article Is Chesapeake’s New CEO Overpaid? originally appeared on Fool.com.

Fool contributor Arjun Sreekumar owns shares of Chesapeake Energy, Devon Energy, and SandRidge Energy (NYSE:SD). The Motley Fool owns shares of Devon Energy and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.