Exhibit 10.4

 

Non-Employee Director Compensation

Effective July 1, 2004

 

Annual Retainer:

$20,000

 

Meeting Fees:

Meeting fees are subject to a $50,000 per year maximum

 

                Attended in person

$7,500 per meeting

 

                Participated telephonically

$1,500 per meeting

 

Initial Stock Award:

Each non-employee director is granted an award of 10,000 shares of Chesapeake
Energy Corporation common stock upon appointment to the Board of Directors,
pursuant to the 2003 Stock Award Plan for Non-Employee Directors.

 

Stock Options:

Each non-employee director is granted an option to purchase 12,500 shares of
Chesapeake Energy Corporation common stock on the first business day of each
calendar quarter starting with the calendar quarter commencing on July 1, 2004,
pursuant to the 2002 Non-Employee Director Stock Option Plan. Stock options will
expire ten years after the date of grant, be immediately exercisable upon grant
and will be granted with an exercise price equal to the fair market value of the
common stock on the date of grant. On October 1, 2004, the shares available for
grant under the 2002 Non-Employee Director Stock Option Plan were depleted and
the remaining stock options issued to satisfy the October 1, 2004 grant, the
January 3, 2005 grant and the April 1, 2005 grant were (or will be) issued
subject to shareholder approval at Chesapeake’s 2005 annual meeting of
shareholders.

 

Deferred Compensation Plan:

All non-employee directors may elect to defer all or a portion of their cash
compensation.