Chesapeake Energy (CHK)

Other NEO Compensation

The Company currently considers the positions of CFO and COO to be equivalent in terms of the level of responsibility and the significance of contribution to the Company. Specifically, Mr. Rowland’s performance is measured comprehensively but subjectively based on his individual performance and the Company’s performance related to the following:

Mr. Dixon’s performance is measured in the same manner, with respect to the following:

Messrs. Rowland and Dixon both demonstrated exemplary performance in these areas in 2008 and, therefore, the Compensation Committee believes the increases in (i) salary, from $830,000 effective January 1, 2008 to $860,000 effective July 1, 2008; (ii) cash bonuses from $1.2 million in 2007 to $1.3 million in 2008; and (iii) restricted stock awards from 130,000 shares in 2007 (excluding the one-time 2006 Long Term Incentive Award of 106,750 shares for Mr. Dixon in 2007) to 135,000 shares in 2008 for our CFO and COO are appropriate. However, based on the price of the Company’s common stock on the record date of $20.93, the

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restricted stock awards to Messrs. Rowland and Dixon in 2008 had decreased from their grant date value by approximately $4.2 million for each executive to $2.8 million.

The Company also considers our other two EVP positions to be generally equivalent in terms of responsibility and significance to the Company. Mr. Jacobson’s performance is based on his individual performance and the Company’s performance related to the following:

Mr. Lester’s performance is measured in the same manner, based on the following:

The Compensation Committee reviews the performance of both EVPs comprehensively but subjectively, without specifically weighting any one performance factor more heavily than another. Messrs. Jacobson and Lester both demonstrated exemplary performance in these areas in 2008 and, therefore, the Compensation Committee believes the increases in (i) salary, from $775,000 to $800,000 for Mr. Jacobson and from $750,000 to $775,000 for Mr. Lester both effective July 1, 2008; (ii) cash bonuses from $1.0 million in 2007 to $1.2 million for Mr. Jacobson and from $966,000 to $1.1 million for Mr. Lester in 2008; and (iii) restricted stock awards from 95,500 shares in 2007 to 102,900 shares in 2008 for Mr. Jacobson and from 95,000 shares in 2007 to 96,950 shares in 2008 for Mr. Lester (excluding the one-time 2006 Long Term Incentive Awards in 2007 of 91,280 shares for each of Messrs. Jacobson and Lester) for these two EVPs are appropriate. However, based on the price of the Company’s common stock on the record date of $20.93, the restricted stock awards to Messrs. Jacobson and Lester in 2008 had decreased from their grant date value by approximately $3.2 million to $2.2 million for Mr. Jacobson and by $3.0 million to $2.0 million for Mr. Lester.

In light of the global economic recession, the Compensation Committee, during its December 2008 compensation review, did not increase salaries for the executive vice presidents, including our CFO and COO, and senior vice presidents from their July 1, 2008 levels.

As discussed above, the perquisites we provide exclusively to our executive vice presidents and senior vice presidents include reimbursement of monthly country club dues, personal use of fractionally-owned company aircraft and, for our CFO, accounting support. Messrs. Jacobson and Lester are each entitled to 50 hours personal use of fractionally-owned company aircraft each year. Messrs. Rowland and Dixon are each entitled to 175 and 75 hours, respectively, with the difference attributable to Mr. Rowland’s choice to forgo an award of restricted stock under our 2006 Long Term Incentive Program on June 8, 2007.

Other NEO Compensation

The Company currently considers the positions of CFO and COO to be equivalent in terms of the level of responsibility and the significance of contribution to the Company. Specifically, Mr. Rowland’s performance is measured comprehensively but subjectively in terms of his execution of the Company’s hedging program, the quality of the Company’s financial reporting, the Company’s asset financing and monetization strategy and programs, access to capital markets, balance sheet management, stock price performance and the performance of the accounting, treasury and information technology departments. Mr. Dixon’s performance is measured in the same manner, in terms of the Company’s production rates, finding and operating costs, drilling results, reserve replacement, and leasehold acquisition efforts. Messrs. Rowland and Dixon both demonstrated exemplary performance in these areas in 2007 and, therefore, the Compensation Committee believes the increases in (i) salary, from $775,000 effective January 1, 2007 to $830,000 effective January 1, 2008; (ii) cash bonuses from $1.05 million to $1.2 million; and (iii) restricted stock award values from $3.7 million to $4.9 million in 2007 for our CFO and COO are appropriate.

The Company also considers our EVP positions to be generally equivalent in terms of responsibility and significance to the Company. Mr. Jacobson’s performance is measured in terms of his team’s identification, negotiation, execution and integration of attractive acquisition targets and the execution and profitability of divestitures. Mr. Lester’s performance is measured in terms of the Company’s drilling results and reserve replacement. The Compensation Committee reviews the performance of both EVPs comprehensively but subjectively, without specifically weighting any one performance factor more heavily than another. Messrs. Jacobson and Lester both demonstrated exemplary performance in these areas in 2007 and, therefore, the Compensation Committee believes the increases in (i) salary, from $725,000 effective January 1, 2007 to $775,000 for Mr. Jacobson and $750,000 for Mr. Lester both effective January 1, 2008; (ii) cash bonuses from $850,000 to $1.0 million for Mr. Jacobson and $965,000 for Mr. Lester; and (iii) restricted stock award values from $2.7 million to $3.7 million for Mr. Jacobson and $3.6 million for Mr. Lester in 2007 for our EVPs are appropriate.

Martha Burger’s position as Senior Vice President—Human and Corporate Resources is considered one of the most critical in terms of responsibility and significance among the Company’s senior vice presidents. Ms. Burger’s leadership and expertise, not only within the Company but throughout the industry, have positioned Chesapeake well ahead of its peers with respect to the challenges facing the industry’s workforce (as discussed on page 6). Additionally, her efforts have served to establish the Company as both a leader in the promotion and recognition of natural gas as a long-term solution to the nation’s energy problems and a leader in service to the communities in which we operate. Ms. Burger’s performance is measured in terms of the success and effectiveness of the Company’s (i) workforce recruiting, retention, professional development and wellness

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initiatives; (ii) community support and development efforts; and (iii) communication and public relations initiatives. In view of Ms. Burger’s contributions in 2007, the Compensation Committee believes the increases in her salary, cash bonuses and restricted stock award values in 2007 are appropriate.

As discussed above, the perquisites we provide exclusively to our chief executive officer, executive vice presidents and senior vice presidents include reimbursement of monthly country club dues and personal use of fractionally-owned company aircraft. Messrs. Jacobson and Lester and Ms. Burger are each entitled to 50 hours personal use of fractionally-owned company aircraft each year. Messrs. Rowland and Dixon are each entitled to 175 and 75 hours, respectively, with the difference attributable to Mr. Rowland’s choice to forgo an award of restricted stock under our 2006 Long Term Incentive Program.