Reading the news, you would have thought that Friday started on a good note for Chesapeake (NYSE: CHK) shareholders. Prior to the company's annual meeting, it pushed out an SEC filing on the subject of its compensation practices. Over at Reuters, the headline ran "Chesapeake moves to quell shareholder anger on pay."

Sounds promising, right? Too bad the filing was devoid of any real substance.

The meat of the 8-K filing was all of two lines, the first of which simply reiterated the fact that Chesapeake has Cogent Compensation Partners working with the company to review its compensation practices. The second line read, "The Compensation Committee is committed to implementing an executive compensation system that includes objective performance criteria."

Full of sound and fury, signifying nothing
Is this a tale told by an idiot? Perhaps, if the board thinks that this will really "quell shareholder anger."

The fact is that simply saying that the company will use "objective performance criteria" gives the board enough space that it could squeeze multiple semi-trucks, sideways, through this compensation charade. As of last year, the company presented plenty of "criteria" to base pay on. That list included "clear and insightful decision making," "attitude," and "demonstrated commitment to the company."

Will the adjective "objective" make all the difference? It remains to be seen, but the company goes to pains in its most recent proxy to tell shareholders why stock price, production, annual rate of return, commodity derivatives, cost control, and exploration costs are all lousy measures to use for executive compensation. Which is obvious, right? I mean, how do any of those capture attitude?

And even if the performance criteria do become unquestionably objective, I see no reason why the board couldn't present a vast array of "objective performance criteria" and decide year-to-year which are the most useful to justify the pay package they want to award the executives with.

The bottom line is that the board has been such a joke here that there's no reason not to take an "I'll believe it when I see it" attitude.

But wait, there's more!
Unfortunately, based on the preliminary voting results from the company's annual meeting, it doesn't look like it got nearly the kick in the pants from shareholders that I was hoping for. All of the board members up for election -- including chairman Aubrey McClendon -- were re-elected. The rest of the votes also went the way that the board had hoped, including the advisory approval of the company's executive pay and the voting down of a shareholder proposal that would have let shareholders hold an advisory vote on director pay.

While that's all pretty disappointing, it's worth noting that the voting did at least show dissatisfaction -- if the board gives a hoot about that at all. McClendon and Don Nickles were voted in with 78% and 79% of the vote, respectively. Numbers that low are unusual -- compare that with last year's Microsoft (Nasdaq: MSFT) vote in which Steve Ballmer received 95% of the vote and every other director received 98% or more.

In addition, the compensation issue was approved with a vote of merely 58%, and with a 43% vote, the director compensation proposal just barely missed. So it's definitely a bummer that the votes ended up the way they did, but if I put on my optimist cap for a moment, it does suggest that if board members continues to flaunt their power and hand out shareholder money willy-nilly that they could be shown the door by shareholders.

Here's hoping.

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