Chesapeake Energy (CHK)

Board of Directors’ Statement in Opposition to Voting Item 7

Chesapeake has previously adopted, as part of its Employment Policies applicable to all employees of the Company a policy on Equal Employment Opportunity (“EEO Policy”) that addresses the concerns raised in this proposal with respect to discrimination in employment. This proposal incorrectly states that the Company does

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not have a policy that explicitly prohibits discrimination based on sexual orientation. On the contrary, sexual orientation is specifically covered in our EEO Policy, as set forth below:

“It is the policy of Chesapeake to create a favorable work environment in which all employees regardless of race, color, religion, creed, age, sex, national origin or ancestry, marital status, sexual orientation, status as a disabled or Vietnam era veteran, or status as a qualified individual with a disability can enjoy equal opportunities in their employment relationship with the Company…. It is prohibited for any employee of the Company to refuse to hire, train, promote or provide equitable employment conditions to any employee or applicant, or to discipline or dismiss an employee solely on the basis of the protected categories set forth above… (emphasis added)”

THE PROPONENT HAS ACKNOWLEDGED VERBALLY, THROUGH TELEPHONE CONVERSATIONS WITH THE COMPANY, THAT THE COMPANY’S CURRENT EEO POLICY DOES, IN FACT, PROHIBIT DISCRIMINATION BASED ON SEXUAL ORIENTATION, BUT THE PROPONENT HAS EXPRESSLY REFUSED TO WITHDRAW THE PROPOSAL OR TO AMEND IT TO CORRECT ITS IMPLICATION THAT THE COMPANY’S CURRENT POLICY DOES NOT SUFFICIENTLY ADDRESS SEXUAL ORIENTATION.

The Company is an equal opportunity employer, fully committed to complying with all applicable equal opportunity laws. Furthermore, the Company communicates its policies to all employees and regularly provides harassment sensitivity training workshops for its employees in order to help provide a work environment free of harassment of any kind. The Company believes that it is not practical or even possible to list all categories on which to prohibit discrimination and that such an effort, moreover, would only divert attention from the goal of a truly non-discriminatory workplace. In sum, the Company’s existing policies and standards already substantially implement the concerns addressed in this proposal. The Board has determined that adoption of the amendment to the Company’s EEO Policy described in the proposal is not necessary to ensure a non-discriminatory workplace.

Board of Directors Statement in Opposition to Voting Item 4

The Company’s Certificate of Incorporation provides that our Board of Directors is divided into three classes with approximately one-third of the directors standing for election each year for three-year terms. This structure has been in place since the Company’s initial public offering in February 1993.

Our Board of Directors believes that the current classification structure of the Board remains in the best interests of our shareholders for the following reasons:

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The stated basis of Mr. Armstrong’s proposal is that our Company’s management and Board are “being more strongly tested due to economic conditions,” so our Company’s election process should be changed to declassify the Board so that all of the directors could be voted off the Board as a group. The proposal is based on an unsupported assumption that such an arrangement provides greater shareholder accountability. As discussed below, it is not clear that such an arrangement increases accountability.

In an indication that the proposal is a mass produced proposal that does not fit the current status of your Company, the economic conditions in the oil and gas exploration and production industry are the best they have been in years. However, current industry conditions alone do not explain the outstanding performance of your Company. The success of your Company is based on a number of actions taken by the management team and the Board. In the late 1990s, the oil and gas industry experienced extremely difficult times due to a severe retraction in oil and gas prices. During that time our Company’s stock price decreased to less than $1.00 per share. As a result of the experience and insight of the directors and the management team, our Company purchased valuable oil and gas leases at fire sale prices when the outlook for the industry and our Company was very negative. The experience and continuity of our directors and management team continue to provide significant enhanced performance in our Company’s stock price by, among other things, implementing a first class hedging program and identifying industry leading leasehold positions in emerging shale plays.

Mr. Armstrong’s stated objective is to provide a mechanism to inform the Board that the shareholders are unhappy with their actions, the management team or the direction of the Company. The more effective method of achieving that objective is to advance this proposal or propose an alternate slate of director nominees at that time.

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Given the consensual nature of the decision process of an effective board of directors, such actions would send a clear message to the Board without the negative effect to the Company and its shareholders of removing all of the members of the Board at one time.

In addition, approval by our shareholders of Voting Item 4 will not declassify the Board of Directors. The elimination of the classification structure of our Board can only be accomplished through an amendment to our Certificate of Incorporation, which would require a vote of 66.67% of the issued and outstanding shares of the Company in favor of such an amendment.