This excerpt taken from the CHK DEF 14A filed Apr 30, 2007.
Administration. The Board of Directors is responsible for administration of the Director Plan and has complete discretion to formulate policies and establish rules and regulations for its administration.
Eligible Participants. Only individuals who are not officers or otherwise employed by the Company or any of its subsidiaries and who become directors of the Company after the effective date of the Director Plan are eligible for awards under the Director Plan.
Shares Available for Award. The maximum number of shares of common stock which are available for award under the Director Plan will be 100,000 shares, an increase of 50,000 shares. Each individual who becomes a non-employee director will be awarded 10,000 shares of common stock on his or her first day of service as a non-employee director. If the amendment is approved, awards to six new non-employee directors may be made under the Director Plan.
The Director Plan provides for appropriate adjustments in the event of a stock split, reverse stock split, stock dividend, combination or reclassification of shares.
Termination and Amendment. The Board may suspend or terminate the Director Plan at any time. In addition, the Board may, from time to time, amend the Director Plan in any manner, but may not adopt any amendment without shareholder approval if in the opinion of counsel to the Company, shareholder approval is required by any federal or state laws or regulations or the rules of any stock exchange on which the common stock may be listed.
Federal Income Tax Consequences. For U.S. federal income tax purposes, on the date of a stock award for which no payment was made by the participant, the participant will recognize ordinary income in an amount equal to the fair market value of the common stock on the award date. Stock awards provide the Company with a deduction equal to the amount of income recognized by the participant, subject to certain deduction limitations. A participants adjusted basis in the common stock received through stock awards is equal to any ordinary income related to the award recognized by the participant. If a participant thereafter sells the common stock, any amount realized over (under) the adjusted basis of the common stock will constitute capital gain (loss) to the participant for U.S. federal income tax purposes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 2003 STOCK AWARD PLAN FOR NON-EMPLOYEE DIRECTORS. The affirmative vote of the holders of a majority of the shares of common stock present at the meeting, in person or by proxy, will be required for approval of the amendment to the Director Plan.