One of the ways that Chesapeake measures how it is performing relative to its peers is to measure the return on capital that it is earning and the amount of capital it is investing. Generally speaking, if we can exceed the industry norms when using these two metrics, we should exceed the industry norm in terms of EPS growth.
Capital Expenditures / Total Capitalization – compares how effectively we have identified opportunities and converted them into investments.
Return on Equity – compares how effectively the capital has previously been invested and how well we have managed our operations.
By combining these two metrics we are measuring the results of performance from both a prospective (investing for the long-term) and current performance perspective (managing our operations to generate the expected returns).
We will continue to focus on achieving superior returns in our existing businesses while investing aggressively to grow our company.