By Tim McLaughlin
(Reuters) - The retirement plan at Chesapeake Energy Corp (NYSE:CHK), which has suffered heavy losses from big allocations in company stock, is being partially terminated after significant employee reductions at the company.
The partial termination means the company will be required to vest at 100 percent all terminated participants, Chesapeake said Tuesday in the 401(k) plan's annual report. It was unclear how much the vesting would cost the company. Chesapeake was not immediately available for comment.
Nearly 8,000 participants in Chesapeake's 401(k) are exposed to the company's reversal of fortune. They held 35 percent of the plan’s $615 million in assets in company stock at the end of 2014.
While that exposure has declined, it has been a painful unwinding as employees sells Chesapeake shares in a falling market.
The retirement plan had a total investment loss of $170.3 million in 2015, as net assets fell 23 percent to $483 million, according to the annual report. The plan's performance was hurt by heavy exposure to Chesapeake's stock, a top investment holding by participants.
The stock is down 78 percent since the end of 2014 as the second-largest natural gas producer in the United States grapples with low energy prices and a heavy debt load.
At the end of 2015, the Chesapeake retirement plan had $50 million, or 11 percent, of its total investments in shares of Chesapeake. The plan held $388 million in Chesapeake stock at the beginning of 2014.
Participants in the plan bought $28 million in Chesapeake shares during 2015. But they were mostly sellers, unloading $109.4 worth of company shares last year, according to the plan's annual report.