Exhibit 10.5.3

2013 PERFORMANCE SHARE UNIT AWARD AGREEMENT FOR
CHESAPEAKE ENERGY CORPORATION
LONG TERM INCENTIVE PLAN
THIS 2013 PERFORMANCE SHARE UNIT AWARD AGREEMENT (the “Agreement”) entered into
as of the grant date set forth on the attached Notice of PSU Award (the
“Notice”), by and between Chesapeake Energy Corporation, an Oklahoma corporation
(the “Company”), and Aubrey K. McClendon (the “Participant”);
W I T N E S S E T H:
WHEREAS, the Company has previously adopted the Chesapeake Energy Corporation
Amended and Restated Long Term Incentive Plan effective as of October 1, 2004,
as amended from time to time (the “Plan”); and
WHEREAS, the Company has awarded the Participant Performance Share Units under
the Plan, as set forth on the Notice, subject to the terms and conditions of
this Agreement; and
NOW, THEREFORE, in consideration of the premises and the mutual promises and
covenants herein contained, the Participant and the Company agree as follows:
1.
The Plan. The Plan, a copy of which has been made available to the Participant,
is hereby incorporated by reference herein and made a part hereof for all
purposes, and when taken with this Agreement shall govern the rights of the
Participant and the Company with respect to the Award (as defined below). Any
capitalized terms used but not defined in this Agreement have the same meanings
given to them in the Plan. The Participant acknowledges that he has received a
copy of, or has online access to, the Plan, and hereby accepts the Performance
Share Units (“PSUs”) subject to all the terms and provisions of the Plan and
this Agreement. Such acceptance may be in any manner that the Committee may
establish pursuant to the Notice, including deemed acceptance. The Participant
hereby further agrees that he has received a copy of, or has online access to,
the most recent Form S-8 prospectus relating to the Plan and hereby acknowledges
his or her acceptance and receipt of such prospectus electronically.

2.
Grant of Award. The Company hereby awards to the Participant the number of PSUs
in accordance with the Notice, on the terms and conditions set forth herein, in
the Plan and in the Notice (the “Award”). The Award gives the Participant the
opportunity to earn the right to receive payment of cash for each PSU awarded in
accordance with this Agreement and the Notice. The Award is subject to
adjustment under the terms of the Plan. This Agreement and the Notice establish
vesting requirements and determination of payment based on attainment by the
Company of specified performance levels for the Performance Measures described
in the Notice during the period commencing on the grant date and ending on the
date set forth in the Notice (the “Performance Period”), as established and
determined by the Committee. The Participant shall have no rights as a
shareholder of the Company with respect to the PSUs.

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Chesapeake Energy Corporation
Notice of PSU Award

3.
Vesting and Forfeiture. The PSUs will vest in accordance with the vesting
schedule set forth on the Notice. Notwithstanding any other provision of this
Agreement, a Participant shall not be entitled to any payment under this
Agreement unless and until the Committee certifies the level of performance
respecting the Performance Measures that has been achieved and the Participant
satisfies applicable vesting conditions for such payment.

4.
Fundamental Transaction; Change of Control. In accordance with the terms of the
Plan, upon the occurrence of a Fundamental Transaction or a Change of Control,
all PSUs shall be deemed to have achieved a level of performance respecting the
Performance Measures equal to the higher of (i) such performance level as
required to achieve the Target PSU Allocation (as described in the Notice) or
(ii) the actual performance level. The Committee may, in its discretion, adjust
the level of performance respecting the Performance Measures described above to
account for the change in any specified Performance Measure caused by measuring
such values over the period commencing on the grant date and ending on the date
of the Fundamental Transaction or Change of Control instead of over the
Performance Period. All PSUs awarded pursuant to this paragraph 4 shall be
deemed to fully vest at such time.

5.
Nontransferability of Award. A PSU is not transferable other than by will or the
laws of descent and distribution. Any attempted sale, assignment, transfer,
pledge, hypothecation or other disposition of, or the levy of execution,
attachment or similar process upon, a PSU contrary to the provisions hereof
shall be void and ineffective, shall give no right to any purported transferee,
and may, at the sole discretion of the Committee, result in forfeiture of the
PSU involved in such attempt.

6.
Payment. The payment date(s) with respect to all PSUs in which a Participant
becomes vested shall be the earlier of (i) the payment date(s) set forth on the
Notice or, (ii) in the event of a Fundamental Transaction or Change of Control,
no later than 60 days following such Fundamental Transaction or Change of
Control.

7.
Withholding. The Company may make such provision as it may deem appropriate for
the withholding of any applicable federal, state or local taxes that it
determines it may be obligated to withhold or pay in connection with the PSUs.

8.
Amendments. This Award Agreement may be amended by a written agreement signed by
the Company and the Participant; provided that the Committee may modify the
terms of this Award Agreement without the consent of the Participant in any
manner that is not adverse to the Participant.

9.
Securities Law Restrictions. This Award shall be issued, vested and paid only in
compliance with the Securities Act of 1933, as amended (the “Act”), and any
other applicable securities law, or pursuant to an exemption therefrom.

10.
Participant Misconduct.

(a)
Notwithstanding anything in the Plan or this Agreement to the contrary, the
Committee shall have the authority to determine that in the event of serious
misconduct by the Participant (including material violations of the Founder
Separation and

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Chesapeake Energy Corporation
Notice of PSU Award

Services Agreement effective January 29, 2013 between the Participant and the
Company (the “Separation Agreement”), surviving terms of the employment
agreement between the Participant and the Company, confidentiality or other
proprietary matters, in each case that have not been cured within a reasonable
period following notice) or any activity of a Participant in competition with
the business of the Company or any Subsidiary or Affiliated Entity not otherwise
permitted by the Separation Agreement which has not been cured following notice,
the PSUs may be cancelled, in whole or in part, whether or not vested. The
determination of whether a Participant has violated the Separation Agreement or
otherwise engaged in serious misconduct or any activity in competition with the
business of the Company or any Subsidiary or Affiliated Entity shall be
determined by the Committee in good faith . This paragraph 10 shall have no
effect and be deleted from this Agreement following a Change of Control.
(b)
The Award made pursuant to this Agreement is subject to recovery pursuant to the
Company’s compensation recovery policy then in effect. To the extent required by
applicable laws, rules, regulations or securities exchange listing requirements
and the Company’s compensation recovery policy then in effect, the Company shall
have the right, and shall take all actions necessary, to recover the incentive
compensation received by the Participant pursuant to the Award.

11.
Notices. All notices or other communications relating to the Plan and this
Agreement as it relates to the Participant shall be in electronic or written
form. If in writing, such notices shall be deemed to have been made if
personally delivered, or if mailed, by regular U.S. mail, postage prepaid, by
the Company to the Participant at his last known address evidenced on the
payroll records of the Company.

12.
Binding Effect and Governing Law. This Agreement shall be (i) binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns except as may be limited by the Plan and (ii) governed
and construed under the laws of the State of Oklahoma.

13.
Captions. The captions of specific provisions of this Agreement are for
convenience and reference only, and in no way define, describe, extend or limit
the scope of this Agreement or the intent of any provision hereof.

14.
Counterparts; Entire Agreement. This Agreement may be accepted by the required
form of acceptance established by the Committee pursuant to the Notice, which
may include deemed acceptance. If execution of the Notice is the required form
of acceptance established by the Committee, then such execution may be in any
number of identical counterparts, each of which shall be deemed an original for
all purposes, but all of which taken together shall form but one agreement. This
Agreement, together with the Notice, shall constitute the entire agreement
between the parties.

15.
Code Section 409A. The Agreement and all Awards granted hereunder are intended
to comply with, or otherwise be exempt from, Code Section 409A. The Plan and all
Awards shall be administered, interpreted, and construed in a manner constituent
with Code Section 409A or an exemption thereform. Should any provision of the
Plan, the Agreement or any Award hereunder be found not to comply with, or
otherwise be exempt from, the provisions

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Chesapeake Energy Corporation
Notice of PSU Award

of the Code Section 409A, such provision shall be modified and given effect
(retroactively if necessary), in the sole discretion of the Committee, and
without the consent of the Participant, in such manner as the Committee
determines to be necessary or appropriate to comply with, or to effectuate an
exemption from, Code Section 409A. Without limiting the foregoing and
notwithstanding anything contained herein to the contrary, to the extent
required in order to avoid accelerated taxation or tax penalties under Section
409A, amounts that would otherwise be payable and benefits that would otherwise
be provided pursuant to this Plan during the six-month period immediately
following the Employee’s separation from service shall instead be paid on the
first business day after the date that is six months following the Executive’s
termination date (or death, if earlier), with interest from the date such
amounts would otherwise have been paid at the short-term applicable federal
rate, compounded semi-annually, as determined under Section 1274 of the Code,
for the month in which payment would have been made but for the delay in payment
required to avoid the imposition of an additional rate of tax on the Employee
under Section 409A. Any payments to be made under this Plan upon a termination
of employment shall only be made if such termination of employment constitutes a
“separation from service” under Section 409A. Notwithstanding the foregoing, the
Company makes no representations that the payments and benefits provided under
this Plan comply with Section 409A and in no event shall the Company be liable
for all or any portion of any taxes, penalties, interest or other expenses that
may be incurred by the Employee on account of non-compliance with Section 409A.

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Chesapeake Energy Corporation
Notice of PSU Award

Notice of PSU Award
Chesapeake Energy Corporation
ID: 73-1395733
6100 N. Western Avenue
Oklahoma City, OK 73118
Aubrey K. McClendon
6902 Avondale Drive
Oklahoma City, OK 73116
Plan: Chesapeake Energy Corporation Amended and Restated Long Term Incentive
Plan
ID: 010106

Effective January 29, 2013 (the “Grant Date”), you have been granted an Award of
a number (the Target PSU Allocation, specified below) of Performance Share Units
(“PSUs”) by Chesapeake Energy Corporation (the “Company”). This Award entitles
you to the right to receive a cash payment for each PSU awarded in an amount
equal to the Final PSU Value (as defined below) on the Payment Date specified
below. The number of PSUs awarded is subject to adjustment pursuant to the level
of performance respecting the Performance Measures over the Performance Period,
as determined by the Committee and as set forth below. This Award is further
subject to the vesting requirements set forth below.
Grant Date Value of Target Award:

$6,750,000

 
Target PSU Allocation:    
324,680

 
Last Day of the Performance Period:
12/31/2015

 

Payment Date: Any payment earned pursuant to this Award shall be made as soon as
practicable after the Committee certifies the Company’s performance respecting
the performance goals on or following January 1, 2016, but in no case later than
March 15, 2016.
Final PSU Value: The value of each PSU is equal to the average closing price per
share of the Company’s common stock as reported on the New York Stock Exchange
for the 20 trading days including and immediately preceding the last day of the
Performance Period.
Performance Measures: The final number of PSUs you may receive will be adjusted
based on the attainment by the Company of specified levels of performance over
the Performance Period, as determined by the Committee following the last day of
the Performance Period. The Committee has established that the PSUs awarded will
be adjusted based on a modifier comprised of three components:
•
Relative TSR Modifier: The Relative Total Shareholder Return1 (“TSR”) Modifier
is based on the Company’s relative TSR performance. Relative TSR measures the
performance of the Company’s share price and dividends compared to its peer
group2 during the Performance Period.

___________________________________________
1
The TSR for given Performance Period shall be calculated based on the difference
between the average closing price per share of the Company's common stock for
the 20 trading days including and immediately preceding the Grant Date and the
average closing price per share of the Company's common stock for the 20 trading
days including and immediately preceding the Last Day of the Performance Period
(each as reported on the New York Stock Exchange), adjusting for dividend
distributions and such other adjustments deemed necessary and appropriate by the
Committee.

2
The performance peer group consists of the following companies: Anadarko
Petroleum Corporation, Apache Corporation, Continental Resources, Inc., Devon
Energy Corporation, EOG Resources, Inc., Hess Corp., Marathon Oil Corporation,
Murphy Oil Corporation, Noble Energy, Inc., Occidental Petroleum Corporation and
SandRidge Energy Inc.

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Chesapeake Energy Corporation
Notice of PSU Award

•
Relative Proved Reserves Growth Modifier: The Relative Proved Reserves Growth
Modifier is based on the Company’s relative proved reserves growth (as adjusted
for asset purchases or dispositions) compared to its peer group over the
Performance Period.

•
Relative Production Growth Modifier: The Relative Production Growth Modifier is
based on the Company’s production growth (as adjusted for asset purchases or
dispositions) compared to its peer group over the Performance Period.

The Combined Modifier is represented as a percentage of the Target PSU
Allocation and is the sum of the Relative TSR Modifier, Relative Proved Reserves
Growth Modifier and Relative Production Growth Modifier, which are more fully
described in Schedule 1. The Combined Modifier is further subject to a “Circuit
Breaker”, a cap of 100% of the Target PSU Allocation in the event the Company’s
absolute TSR performance over the Performance Period is negative. Otherwise, the
Combined Modifier is subject to a cap of 200% of the Target PSU Allocation.
In no event will the Committee adjust the final number of PSUs to be greater
than 200% of the Target PSU Allocation. At the end of each Performance Period
the Committee will multiply the Target PSU Allocation by the Combined Modifier
to determine the final number of PSUs resulting from a PSU Award. The cash
payment made to you on each Payment Date will be an amount equal to the final
number of PSUs you receive multiplied by the Final PSU Value. For illustrations,
please refer to Schedule 2.
Vesting. Your Award will vest in increments on the dates shown below. Such
vesting will continue as though you remain an Eligible Person through the last
date shown below, subject to the terms of the Plan and the Agreement. Vesting
entitles you to such vested PSUs, subject to final adjustment following the last
day of each Performance Period to reflect the level of performance respecting
the Performance Measures as described above. In no event shall any payment be
made prior to the end of an applicable Performance Period.
3-year performance period PSU:
PSUs
 
Time Vesting
108,227
 
01/29/2014
108,227
 
01/29/2015
108,226
 
01/29/2016

No Acceleration of Payment. In order to comply fully with and meet all the
applicable requirements of Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the regulations thereunder with respect to Awards, the payment
provisions in this Notice and the Agreement shall supersede and replace all
inconsistent provisions in any pre-existing agreements between you and the
Company that may be interpreted as providing for the acceleration of payment of
the Award and all such provisions are specifically waived with respect to the
Award, including all such provisions in any pre-existing employment agreement
between you and the Company.
Acceptance. You are required to accept the terms and conditions set forth in
this Notice, the Agreement and the Plan, all of which are made a part of this
document in order for you to receive the Award granted to you hereunder. Any
capitalized terms used but not defined in this Notice have the same meanings
given to them in the Agreement or the Plan. By your signature and the Company’s
signature below, you and the Company agree that this award is granted under and
governed by the terms and conditions of the Plan and the Agreement, all of which
are attached and made a part of this document.

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Chesapeake Energy Corporation
Notice of PSU Award

/s/ James R. Webb
 
Chesapeake Energy Corporation
 
 
 
/s/ Aubrey K. McClendon
 
AUBREY McCLENDON
 

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MODIFIERS
The table below shows specific modifiers based upon specific levels of
performance. The Committee will calculate the modifiers for actual levels of
performance by interpolating between such specific modifiers. For example, the
Relative Proved Reserves Growth Modifier correlated with a relative performance
placing the Company in the 37.5th percentile for proved reserves growth over
three years would be equal 18.75%.
3-year performance period PSUs:
 
Relative Performance and Plan Payout
3-Year Modifiers
<25th %ile
25th %ile
50th %ile
75th %ile
100th %ile
Relative TSR Over 3 Years
0.0%
25.0%
50.0%
75.0%
125.0%
Relative Proved Reserves Growth Over 3 Years
0.0%
12.5%
25.0%
37.5%
62.5%
Relative Production
Growth Over 3 Years
0.0%
12.5%
25.0%
37.5%
62.5%