Chesapeake Energy Earnings
Chesapeake Energy Earnings, Chesapeake Energy founder Aubrey McClendon was stripped of his chairmanship role Tuesday following shareholder complaints that his personal business interests could conflict with those of the company he runs.
McClendon will remain CEO. The company’s board said it’s searching for an independent chairman.
The board has been feeling the heat from shareholders after reports surfaced that McClendon took out more than $1 billion in loans to pay for his stake in the company’s wells. He was allowed to buy those stakes as a part of his compensation program, a perk that had long raised concerns from shareholders.
Some of the loans came from a group that was also planning to buy Chesapeake assets. Investors said McClendon’s private dealings with the group could have influenced Chesapeake’s decision to sell those assets.
The company said Friday it will end the investment program in 2014, 18 months ahead of schedule, to “eliminate a source of controversy.” The moves were welcomed by Chesapeake’s largest shareholder.
“Aubrey was right to recognize that these actions are in the best interests of the company and its shareholders,” said O. Mason Hawkins, chairman and CEO of Southeastern Asset Management, which holds a 13.2 percent stake.
McClendon, 52, spent most of his adult life searching for natural gas and oil in the U.S. He co-founded Chesapeake in 1989, turning an initial $50,000 investment into America’s second-largest natural gas producer behind Exxon Mobil Corp.
His success brought a flood of prestige and significant wealth. He was America’s top-paid CEO in 2008, receiving compensation worth $112.5 million. He established himself as a leading spokesman for the benefits of natural gas. And he became a part owner of the NBA’s Oklahoma City Thunder.
The petroleum business, however, is notorious for booms and busts. Sometimes within the same year. McClendon hasn’t been immune.
When natural gas prices plunged in 2008, it created huge financial hardship for Chesapeake’s investors, including McClendon. The company’s stock tumbled 60 percent and McClendon was forced to sell $550 million of stock to cover bank demands for repayment of loans. (AP)