Chesapeake Energy (CHK)

Burn Rate and Plan Benefits

For 2004 through 2006, the Company’s three-year average annual stock usage rate or “burn rate” was 2.45%. Burn rate is defined by Institutional Shareholder Services as the total number of equity awards granted in a given year divided by the number of common shares outstanding. Our burn rate in 2006 was 2.18%, reflecting the change we made to awarding officers and employees restricted stock rather than stock options. As of the record date, the weighted average exercise price of all outstanding stock options is $7.52 per share and the weighted average remaining contractual life is five years.

There are currently 2,737,500 shares authorized for future issuance pursuant to new awards under the LTIP and 125,000 shares are subject to outstanding stock options granted to our non-employee directors. As of the record date, we intend to issue shares of restricted stock from the LTIP pursuant to our 2006 Program to the following persons and groups:

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Table of Contents

Burn Rate and Plan Benefits

For 2003 through 2005, the Company’s three-year average annual stock usage rate or “burn rate” was 2.45%. Burn rate is defined by Institutional Shareholder Services as the total number of equity awards granted in a given year divided by the number of common shares outstanding. Our burn rate in 2005 was 2.18%, reflecting the change we made to awarding officers and employees restricted stock rather than stock options.

There are currently 2,737,500 shares authorized for future issuance under the LTIP and 162,500 outstanding stock options granted to our non-employee directors as detailed in the following table:

The selection of officers, employees, consultants and non-employee directors who will receive future awards under the LTIP and the size and types of awards will be determined by the Committee or the Board of Directors. The compensation of non-employee directors currently includes the annual award of 12,500 shares of restricted common stock, as described below on page 18 under “Directors’ Compensation.” Other than such director equity compensation, it is not possible to predict the benefits or amounts that will be received by, or allocated to, particular individuals or groups eligible to receive future awards.