If you go all the way to page 14 under the “Transactions with Related Persons” section after the disclosure about the Oklahoma City Thunder that is where you find the goodies. This is the “Founder Well Participation Program” and it shows the sums that Aubrey McClendon got from the well participation program.  After that, it also shows that the Map Sale was rescinded.

In order to avoid any data confusion and in order to avoid any contextual issues, we have run this verbatim from the proxy materials.  The proxy noted, “The Board and Aubrey voluntarily renegotiated the terms of the FWPP to provide for early termination on June 30, 2014, 18 months before the previous termination date of December 31, 2015, pursuant to a letter agreement previously filed with the SEC. Aubrey will receive no compensation of any kind in connection with the early termination of the FWPP. Further, to address requests for more information, Aubrey voluntarily disclosed personal financial and operational information regarding his oil and gas investments through the FWPP.”

The company has reaffirmed that it plans to nominate an independent non-Executive Chairman.  Here are the full details of the WELL PARTICIPATION PLAN as follows:

The FWPP permits Mr. McClendon, the Company’s co-founder, to participate and invest as a working interest owner in new wells drilled by the Company. In 2005, the FWPP was documented as a formal plan containing substantially the same terms as prior agreements with the Company’s two co-founders that had been in place since the Company’s initial public offering in 1993. Shareholders approved the FWPP on June 10, 2005. The participation of co-founder Tom L. Ward terminated following his separation from the Company in 2006. The Company believes the FWPP fosters and promotes the development and execution of the Company’s business by aligning the interests of Mr. McClendon and the Company. Mr. McClendon has continually participated in the FWPP since the Company’s initial public offering in 1993, except during the five-quarter period from January 1, 1999 to March 31, 2000. The Board and Mr. McClendon recently renegotiated the terms of the FWPP to provide for the early termination of the FWPP on June 30, 2014, 18 months before the end of its current term on December 31, 2015, pursuant to a letter agreement previously filed with the SEC on the Company’s Form 8-K on May 2, 2012. Mr. McClendon will receive no compensation of any kind in connection with the early termination of the FWPP.

Under the FWPP, Mr. McClendon has the right to participate in either all or none of the wells spudded by or on behalf of the Company during each calendar year. Prior to the beginning of each year, Mr. McClendon must provide written notice to the members of the Compensation Committee of his election to participate in the FWPP and his proposed working interest percentage for that year. His working interest percentage may not exceed a 2.5% working interest in a well and is not effective for any well where the Company’s working interest after Mr. McClendon’s participation election would be reduced to below 12.5%. Subject to these limitations, if Mr. McClendon elects to participate in the FWPP, he must participate in all wells spudded by or on behalf of the Company during the given calendar year and cannot elect to participate on a well-by-well basis. In September 2011, Mr. McClendon elected to participate in the FWPP for the 2012 calendar year at the maximum 2.5% working interest permitted, the same participation percentage that Mr. McClendon has elected for the past nine years.

What has changed in the last two weeks is Europe.  Two weeks ago it was not expected that France was going to suddenly issue a citizen-wide veto of the austerity measures.  Now that Sarkozy has effectively lost to Hollande in French elections, France is taking a socialist step and is effectively boycotting its austerity measures.

The move in France followed an inability for the Dutch to reach a budgetary agreement, and now we have Spain back in trouble.  To add insult to injury, the new Greek politicos are just wanting to break the agreed-to austerity measures that allowed it to avoid default (as if you should be surprised there!).  Now we have Ireland even calling anti-austerity sounds with an implied return of Sinn Fein in the public.

So, back to bonds… The 10-Year Treasury Note is now yielding 1.81%.  If you go back and review the charts, the 1.80% acted as a yield floor in February of 2012 and in December of 2011.  In September and October of 2011 the floor was closer to 1.70% as an absolute low, but when that came off the 10-year note yield rose 30 basis points in just over a week. The 10-Year note was yielding 2.20% as recently as April 5, 2012 and had risen to 2.40% as recently as March 20, 2012 (after having risen 40 basis points in just 9 trading sessions).

Now we have a 30-Year Treasury “Long Bond” yield back at almost 3%.  For the “Long Bond” yields to be back at the real lows it has to drop to about 2.90% and ultimately about 2.80% as the floor in September, October, and again in December of 2012. The 30-Year yield was at 3.40% as recently as April 4, 2012.

Credit Suisse just lowered its S&P 500 target to 1,450 from 1,470 this morning and it has increased the odds that both Greece leaves the Euro and also that the Euro could dissolve entirely.

iShares Barclays 20+ Year Treasury Bond (AMEX: TLT) has risen almost $10.00 per share since March 20, 2012 and that shows just how much interest has been there from what are normally equity investors who are preferring to Buy exchange-traded Treasury debt products.  Its yield is currently about 2.85%.

Junk bonds have lost their luster again, and it was only a week or so ago that the index was hitting a new high.  SPDR Barclays Capital High Yield Bond (AMEX: JNK) recently peaked above $40.00 and it is now at $39.50.  Investors have also turned away from the high-payout MLP sector as the JPMorgan Alerian MLP Index ETN (AMEX: AMJ) product recently peaked at almost $42.00 and it is now under $38.70 despite what is a high ‘yield equivalent’ for investors.

The banking sector surged in the first quarter but it has pulled back substantially.  The Financial Select Sector SPDR (AMEX: XLF) peaked at $16.20 and it is now down at almost $14.90 for what is getting closer to a 10% correction.  The highly volatile and leveraged Direxion Daily Financial Bull 3X Shares (AMEX: FAS) peaked around $110.00 per share at the end of March and start of April and it is now challenging the $94.00 price.  Banks and financials are back out of favor, mostly due to fears about Europe dragging them down.

The real question is whether or not this is the signal of the next recession or whether this is a trade for the “Sell in May and go away!” theme that investors are more worried about.  All growth indicators from non-farm payrolls, purchasing managers, and manufacturing and services activity readings are pointing so far to what is just slower and slower growth.

In the United States, Q1-2012 GDP was up at only +2.2% as government spending was down by 3% in the quarter.  Europe is in all but a deep ‘official recession’ per most of its latest economic reports.  The growth in China and Brazil has seen a tempering throughout this year as well, with other key emerging markets like India and others in South America still seeing slower and slower growth.

The good news against the recession argument is that economists after the last earnings season still seem to be calling for positive growth in U.S. GDP in the second quarter at least as of now.  If that holds true and if the U.S. can avoid getting pulled down by Europe, then perhaps the U.S. will avoid an official recession even if this current growth is rather pathetic.  We also have an election and it is a near certainty that both Presidential candidates are likely going to say whatever they can get away with to win the election in November.

If Q2 does not show negative on the GDP front in the United States, then technically no recession can be declared until early in 2013.  That would coincide with what Ben Bernanke has warned about the financial cliff facing the United States at the end of 2012 and it is when the new tax structure takes place.

The market is definitely voicing concern here.  Is that a recession warning?  It depends upon your own outlook and upon your own interpretations.  It must also be noted that the current drop in stock prices is getting to be where stocks are getting close to ‘oversold’ on the short-term charts even if the fundamentals are of concern.

As a final reminder, stop kidding yourself about the notion of a double dip recession.  We have enjoyed close to three-years of positive economic growth.  If a recession comes again soon, it will just be ‘the next recession’ since a double dip recession has to occur with a couple or a few quarters of the prior recession.

JON C. OGG

The company filed an 8-K after the close of trading Friday.  Hesse noted that the company has received feedback from some shareholders relating to the discretionary adjustment the Compensation Committee made under the incentive plan payouts for the impact of the iPhone on its financial results.

Hesse noted in the filing, “I do not want, nor does our Compensation Committee want, to penalize Sprint employees for the company’s investment with Apple, so I will forego this adjustment to my compensation. I have also voluntarily decided to take some additional actions regarding my personal compensation, and the Compensation Committee has agreed. I’m hopeful that these actions will allow the company to remain focused on delivering the best overall customer experience in the wireless industry, which is what will serve the company best in the long run.”

There is a lot more to this story if you look past the raw terms of the cuts.  Here are some of the actions being taken on Hesse’s compensation:

• Salary cut on a pro-rata basis over his remaining paychecks in 2012 to repay the $239,760 associated with the discretionary adjustment he received in February under the 2011 Short-Term Incentive Plan.
• Salary cut on a pro-rata basis over his remaining paychecks in 2012 to repay the $106,463 associated with the discretionary adjustment he received in February related to the performance units under the 2009 Long-Term Incentive Plan.
• Forfeits any right to a payment of $250,500 associated with the discretionary adjustment earned with respect to the 2011 performance period for the performance units under the 2010 Long-Term Incentive Plan. Subject to the satisfaction of applicable vesting conditions, this payment would otherwise be payable to Hesse in 2013 under the terms of the plan.
• Forfeit any right to payment of $294,107 associated with the discretionary adjustment earned with respect to the 2011 performance period for the performance units under the 2011 Long-Term Incentive Plan. Subject to the satisfaction of applicable vesting conditions, this payment would otherwise be payable to Hesse in 2014 under the terms of the plan.
• Reduce, from 200% of Hesse’s annual base salary ($2.4 million) to 170% ($2.04 million), his target opportunity under the 2012 Short-Term Incentive Compensation Plan.
• Forfeit two million performance units (valued at $2 million) granted to Hesse on February 22, 2012 under the 2012 Long-Term Incentive Compensation Plan.

Again, this feels like one of those situations where there is just a lot more to the story than meets the eye.

Hesse went on to say, “These voluntary actions regarding my personal compensation, which total $3,250,830, will eliminate any benefit for me to the discretionary adjustment the Compensation Committee made earlier this year, and will set my 2012 incentive compensation target opportunities at my 2010 levels.”

Hesse said this voluntary reduction of his future compensation does not constitute “Good Reason” under his amended and restated employment agreement dated December 31, 2008.  Hesse also agreed that if his employment terminates prior to completion of the salary reductions described in the first two bullet points above to a reduction of any amounts otherwise payable to him or his estate in an amount necessary for Sprint Nextel to “fully recover the indicated amounts, and to the extent insufficient to do so, to repay the remainder as soon as reasonably practicable.”

Doesn’t that sound a bit like a clawback of pay similar to what you have heard about for Wall Streeters during the financial crisis?

What is interesting here is that this starts out using the ‘investment’ with Apple over the iPhone.  It is not typical for a CEO to take a pay cut and to address dealings with an outside company as one of the first issues.  That is particularly the case in a hot product like the iPhone.

Another take here, and perhaps the most important take, is that Hesse is losing serious support from inside the company.  The way that the news reports went in February it looks like the board rejected Hesse’s efforts to acquire Dan Hesse, to purchase MetroPCS Communications, Inc. (NYSE: PCS) for the no-contract and ‘pay as you go’ cellphone service offering.  It is worth noting that MetroPCS shares hit another 52-week low on Friday and this one has been battered since earnings just over a week ago.

The question we are asking ourselves here is really about the timing of this filing.  By sneaking the news out on Friday after the close of trading, it sure seems like the company is hoping that other news will be more front and center besides a ‘voluntary’ pay cut.  The news may not be a stock-moving event on its own merit but this certainly feels like the second move from Sprint that would lead us to question just how long Dan Hesse has left as CEO of Sprint Nextel.

Sprint is burdened with debt of more than $20 billion at the end of 2011 and its share price of $2.36 compares to a $2.10 to $6.45 range of the last 52-weeks.  The $7.1 billion market capitalization of the common stock is only a small portion of the Sprint Nextel enterprise value.

Blocking a CEO-led acquisition and then sneaking in a filing late on a Friday showing a ‘voluntary’ pay cut for the CEO… Honestly, how much longer does Dan Hesse have as CEO?

JON C. OGG

Prostate cancer and the issue of Buffett’s successor are likely first.  Will this cause shareholders to call for a more focused disclosure over who will take over as CEO? Even if so, every Berkshire Hathaway investor knows that Berkshire Hathaway is Warren Buffett and Warren Buffett is Berkshire Hathaway.  Our take: Buffett is likely to divulge his successor only when it is on his terms or when the decision must be announced.

The second issue is The Buffett Rule.  Most of the Berkshire Hathaway shareholders are not exactly middle class.  They are usually the one-percenters, at least they are for the A-Shares with that super-high share price.  Warren Buffett was met with a cold stare from the audience before when he defended Lloyd Blankfein at Goldman Sachs Group Inc. (NYSE: GS) and it will be interesting to see how the audience reacts to any notion of paying higher taxes and their chief capitalist calling for Obama and Washington D.C. to increase the tax burden on the wealthy.

Read Also: Buffett’s Full Investment Holdings

While this may seem like a sideshow, the investments in International Business Machines Corporation (NYSE: IBM) and Intel Corporation (NASDAQ: INTC) almost have to be a topic to bring up.  For years Mr. Buffett has shied away from technology.  A $10 billion bet or thereabouts has only grown in value and we all know that Buffett said he would never invest in shares of Microsoft Corporation (NASDAQ: MSFT) because his close ties with Bill Gates would be construed as possessing knowledge that is too close to the situation.

It will be interesting to see if Buffett addresses relatively new positions such as DaVita Inc. (NYSE: DVA) and Dollar General Corporation (NYSE: DG).  DaVita is the king of kidney dialysis and if that is not a captive market then no other market is captive.  Dollar General is one we have referred to over and over as benefitting from the secular trend of dollar stores as these stores are reaching up to grab customers from traditional retailers.

We would also expect to hear a little bit more about the investing decisions and input from Berkshire’s two new portfolio managers Ted Weschler and Todd Combs.

With extremely large stakes in Coca-Cola Company (NYSE: KO) and Wells Fargo & Co. (NYSE: WFC) and with those positions now being up near highs again, it will be interesting to see if Buffett addresses these core holdings as keys to the core holdings with higher dividends.

Berkshire Hathaway’s A-shares closed on Thursday at $121,800 against a 52-week range of $98,952.00 to $123,578.00; and the B-shares closed at $81.26 against a 52-week range of $65.35 to $82.47.

JON C. OGG

Original estimates in the media were put at roughly $80 million for the last of four versions of ‘The Scream’ that was still in private hands.  This auction fetched almost 50% higher than the expectation, although there was speculation that the $80 million price was an understatement.

In recent weeks we had noticed that Sotheby’s stock price had recovered from $36.50 to above $39.00 but that is still shy of the $40+ high in March and still well under the 52-week high of $48.90.  The luxury art market does have price-sensitivity when it comes to the economy and sellers and buyers were reluctant to trade at the end of 2011 when it looked as though Europe might take the global growth story away from the U.S. economy.  That makes it interesting that Sotheby’s is down 2.6% at $38.08 on a day where the market is down only about 0.2%.

The business of ultra high-end collectibles and art is a tricky one and it is a business which many outfits want a piece of.  We have noted earlier this year how the baseball collectible world had two of the famous T206 Honus Wagner tobacco card for sale and how the 100-year old card is now worth millions of dollars in the higher grades.  Another sale has recently taken place with a reported sale of more than $1 million.

eBay Inc. (NASDAQ: EBAY) sells art, baseball cards, and other high-end items.  It has had large sales before, but generally the ultra-high priced items are reserved for specialty auction houses or consignment houses.  Amazon.com, Inc. (NASDAQ: AMZN) even has collectors envy because it recently launched a store site for selling sports collectibles.  Again, neither is ever likely to become the venue for the highest priced collectibles but it is obvious that both have noticed the importance of these markets.

This is the world of extreme alternative investing.  The price of participating has just gone up.

Sotheby’s is hard to invest in for any one event and for any single quarter.  The take here is that if a record has been set at a premium of 50% higher than the estimate of two months ago, this may drive other art collectors to consider releasing some of their prized collection pieces if they think the premium is this high.  That is going to be good for Sotheby’s if that turns out to be the case.

JON C. OGG

So, why are things so bad in the garbage and waste management sector? It is almost scary if you reviewed the earnings report from last week’s reports from Waste Management Inc. (NYSE: WM), Republic Services Inc. (NYSE: RSG) and Waste Connections Inc. (NYSE: WCN). Even Progressive Waste Solutions Ltd. (NYSE: BIN) had a bad report. In case you forgot, Bill Gates has been a huge investor in this sector with a 15% or higher stake in Republic Services Inc. (NYSE: RSG) via his personal investment entity called Cascade Investment.

Last week, particularly Friday, was just brutal on the shares of these companies due to such poor earnings from the waste management sector leaders. A contrarian take against the grain would be that this sector just got a lot cheaper for those investors who have a very long-term outlook. We want to see which companies are now a bargain and which ones may still deserve some caution.

Waste Management Inc. (NYSE: WM) took it on the chin last week as booked revenue of $3.30 billion and, while that was above the consensus of about $3.2 billion, the non-GAAP earnings of $0.38 EPS was shy of the $0.41 EPS estimate as GAAP earnings shrank by 5% from a year earlier. The company also reported a drop in the gross margin, operating margin and net margin. The $15-plus billion garbage company was down by more than 3% when the other reports were taken into consideration, with shares trading just above $34 and very close to the Thomson Reuters consensus price target of $34.40. This was just a $36 stock on Wednesday and the 52-week range is $27.75 to $39.69.

Republic Services Inc. (NYSE: RSG) reported weaker-than-expected first-quarter results as revenue increased 0.9% to $1.98 billion, but earnings per share fell by 7.8% to $0.38 EPS based on lower recycled commodity prices and higher fuel costs. The $10 billion waste company was said to have lost a large national account due to competitive pricing that will cost about $25 million in 2012 sales and it noted a loss of one or two municipal disposal contracts. The company is holding on to its pricing structure and it did manage to raise volume and said that they are seeing positive C&D activity and special waste volume. Republic was down over 11.5% at one point Friday morning at $27.50 and the 52-week range is $24.72 to $33.10.

Waste Connections Inc. (NYSE: WCN) turned in sales growth of more than 13% to $376 million, which was just above estimates, and it claimed increased pricing strength and that its C&D waste volume offset commodities and fuel prices. Still, its EBITDA margin was lower at 30.5% based on lower recycled commodity values and also on higher expenses due to its County Waste acquisition in 2011. The company’s franchise market model is allowing for pricing power and supposedly keeping customer churn lower. Waste Connection shares were down more than 1% on Friday again with shares above $32 and its 52-week range is $29.06 to $35.95. This was probably the only bright spot, but with a $3.5 billion market cap its stock trend was dictated by problems at the larger peers.

U.S. investors often forget about Progressive Waste Solutions Ltd. (NYSE: BIN) because it is based in Canada, but it has a $2.5 billion market cap. Keep in mind that this is the old BFI Canada, and it offers waste services in Canada and in the United States. A weak report from this company last week took a lot of wind out of its sails as well: $0.19 EPS versus $0.24 EPS expected, but revenues rose 3.6% to $438.3 million versus $434.3 million expected. The company reaffirmed its 2012 outlook. Shares were down more than 6% at $21.40 on Friday against a 52-week range of $18.35 to $25.56. The consensus target from Thomson Reuters is closer to $25 over the next year.

Gabelli issued a report on Friday calling a Waste Connection private market value of $31 for 2012 and $34 in 2013. What is interesting is that Thomson Reuters has a consensus target objective of just over $38 for the next 12 months. Gabelli also maintained its Buy stance on Republic Services and Thomson Reuters had a consensus target of $34.60 before considering the double-digit percentage drop on Friday morning.

Raymond James downgraded Republic Services to Market Perform from Outperform based upon the report. We would not be surprised at all if there are more analyst downgrades due to how the whole sector was soft. These reports from last week may set a sour tone for the smaller US Ecology Inc. (NASDAQ: ECOL) as it is set to report its first quarter earnings on Tuesday, May 1, 2012. Its market cap is only $390 million.

Based upon the new share price drops, the dividends of each are looking better: a 3.9% yield for Waste Management Inc. (NYSE: WM), a 2.8% yield for Republic Services Inc. (NYSE: RSG) but only 1.1% for Waste Connections Inc. (NYSE: WCN). Progressive Waste Solutions Ltd. (NYSE: BIN) now has a 2.5% dividend yield.

Things are bad enough in the sector that Enerkem Inc., a Canadian biofuel company backed by Waste Management Inc. (NYSE: WM) and Valero Energy Corporation (NYSE: VLO), even withdrew its registration statement with the SEC that would have allowed it to raise almost $140 million in an initial public offering. Enerkem develops refineries that convert trash into gases that get reprocessed to be turned into ethanol and other chemicals. The outfit cited market conditions in the filing. This is sector-specific market conditions, because, in case you had not noticed, the market has managed to hold up well in earnings season. These “market conditions” are also against the backdrop of what has been a super-premium IPO market.

It may take a bit for the dust to settle here because this was widespread disruption. That being said, we would start to look at a contrarian outlook now that the sector is on sale for those investors who invest with a multiyear horizon. Republic Services Inc. (NYSE: RSG) took it on the chin the worst of the lot, and it is not easy to bet against Bill Gates for too long in his post-software investments.

JON C. OGG