Restructuring and Other Termination Costs

On June 30, 2014, we completed the spin-off of our oilfield services business through a pro rata distribution of SSE common stock to holders of Chesapeake common stock. In connection with the spin-off, we incurred restructuring charges of $12 million consisting of transaction costs, stock-based compensation adjustments and debt extinguishment costs. See Note 2 for further discussion of the spin-off.

On April 1, 2013, Aubrey K. McClendon, the co-founder of the Company, ceased serving as President and CEO and as a director of the Company pursuant to his agreement with the Board of Directors announced on January 29, 2013. Mr. McClendon’s departure from the Company was treated as a termination without cause under his employment agreement. On April 18, 2013, the Company and Mr. McClendon entered into a Founder Separation and Services Agreement, effective January 29, 2013, regarding his separation from employment and to facilitate the relationship between the Company and Mr. McClendon as joint working interest owners of oil and gas wells and acreage. In the Prior Period, we incurred charges of approximately $64 million related to Mr. McClendon’s departure.

In December 2012, Chesapeake announced that it had offered a voluntary separation program (VSP) to certain employees as part of the Company's ongoing efforts to improve efficiencies and reduce costs. The VSP was offered to approximately 275 employees who met criteria based upon a combination of age and years of Chesapeake service, and 211 accepted prior to the expiration of the offer in February 2013. We recognized the expense related to their termination benefits over their remaining service period, which resulted in $62 million of expense for the Prior Period.

During the Prior Period, we also incurred charges of approximately $14 million related to other workforce reductions, including separations of executive officers other than the CEO. Substantially all of the restructuring and other termination costs in 2013 are in the exploration and production operating segment.

Below is a summary of our restructuring and other termination costs for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period:



	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
	($ in millions)
Oilfield services spin-off costs:
Transaction costs	$	14		$	—	$	14		$	—
Stock-based compensation adjustments for Chesapeake employees	5			—		5			—
Stock-based compensation forfeitures for SSE employees	(10		)	—		(10		)	—
Debt extinguishment costs	3			—		3			—
Total oilfield services spin-off costs	12			—		12			—

Termination benefits provided to Mr. McClendon:
Salary and bonus expense	—			—		—			11
Acceleration of 2008 performance bonus clawback	—			—		—			11
Acceleration of stock-based compensation	—			—		—			22
Acceleration of performance share unit awards^(a)	5			—		2			13
Estimated aircraft usage benefits	—			—		—			7
Total termination benefits provided to Mr. McClendon	5			—		2			64

Termination benefits provided to VSP participants:
Salary and bonus expense	—			3		—			32
Acceleration of stock-based compensation	—			3		—			27
Other termination benefits	—			—		—			3
Total termination benefits provided to VSP participants	—			6		—			62

Other termination benefits^(a)	16			1		12			14

Total restructuring and other termination costs	$	33		$	7	$	26		$	140

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(a)	The Current Quarter and Current Period amounts are primarily related to fair value adjustments to PSUs granted to former executives of the Company. For further discussion of our PSUs, see Note 8.