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Chesapeake Energy (CHK) CEO McClendon has borrowed $1.1B (with his shares in the company as...

Chesapeake Energy (CHK) CEO McClendon has borrowed $1.1B (with his shares in the company as collateral) over the last 3 years to invest in thousands of the company's wells. The loans are used to fund a perk which allows him to invest 2.5% in every well drilled by the company. McClendon and the company say the loans pose no conflict of interest nor did they need to be disclosed. Shares -2.2% premarket.
Comments (17)
  • TAS
    , contributor
    Comments (2121) | Send Message
     
    WTF

     

    McClendon is at it again.

     

    Investor's, beware.
    18 Apr 2012, 08:22 AM Reply Like
  • sligoo
    , contributor
    Comments (904) | Send Message
     
    Landman's ethics in action isn't it?
    18 Apr 2012, 08:33 AM Reply Like
  • iknow777
    , contributor
    Comments (32) | Send Message
     
    This is not about me today. This is about a major change long overdue. As a stockholder in chesapeake I have suffered the price declines in natural gas. I used to believe it was well run -NOT ANYMORE! Special privledges for ceos are rampant , 2.5% of every well is absurd and way out of line.I for one get you know who out of his catbird seat and the company has a chance. i could go on and on #land aquis. ,#wells drilled etc Low stock valuations=possib. takeover- what does McClendon care he still gets 2.5%! I don't have the time to redo this , publish it if you like.
    18 Apr 2012, 08:42 AM Reply Like
  • dividend_growth
    , contributor
    Comments (2888) | Send Message
     
    Of course there is a conflict of interest, because that gives CHK management the incentive to aggressively pursue production volume without regard to return on investment!
    18 Apr 2012, 08:52 AM Reply Like
  • montanamark
    , contributor
    Comments (1435) | Send Message
     
    could a regular shareholder do this - no; can he pick and choose which wells to invest - yes; its a conflict - plain and simple
    18 Apr 2012, 09:21 AM Reply Like
  • highview
    , contributor
    Comments (11) | Send Message
     
    More importantly, understand that the 2.5% is only for direct well costs and a very small charge for land and seismic related to a specific well. As a corportation, CHK invests $B on the front end in land acquisition and regional seisimic shoots that are not supported by McClendon's 2.5%. In addition, the efforts of 11,000 employees and every growing building infrastructure is not supported by McClendon. To add insult to injury, his contract provides him with accounting, engineering and marketing services for his internal oil & gas company free of charge. Essentialy McClendon gets a free promote on all his wells compared to the actual costs it takes drill. It is one of the worst cases of conflict of interest since the Enron days.
    18 Apr 2012, 09:31 AM Reply Like
  • auto44
    , contributor
    Comments (3037) | Send Message
     
    Bottom line How does this effect my investment in CHK? It doesn't. The value of the investment is the gas and oil in the ground and it's future price. It does keep the CEO interested in the price of gas though. Glad he's invested along with the rest of us. He is really very important to this company,remember he is true guy who built it from nothing. Jealousy is so easy to a fire to fan, so don't get in an uproar. Logic instead of emotion should tell you that this company will when gas prices again rise, rise with them big time.
    18 Apr 2012, 09:48 AM Reply Like
  • rjj1960
    , contributor
    Comments (1366) | Send Message
     
    CHK shareholders, please get out. Go put your money in an energy company that is more concerned about the shareholder. I have been warning everyone for 2 years about this guy.
    18 Apr 2012, 09:50 AM Reply Like
  • sorayakl
    , contributor
    Comment (1) | Send Message
     
    he can't choose which wells to invest in - it's an all or nothing investment - but using his shares as collateral to finance the investment is what got him and the company in trouble in 2008 when he liquidated 90% of his shares to meet margin calls.
    18 Apr 2012, 09:56 AM Reply Like
  • daro
    , contributor
    Comments (1559) | Send Message
     
    And the real problem is that when aubrey blows out again will the board give him a special one time comp package to pay his debts and bail him out. That is a conflict and a ripoff bc what did he do to earn that bail out package?
    I guess I will wait until he blows out again and the brokers liquidate his position in the company. In the ensuing mayhem the stock will be undervalued.
    18 Apr 2012, 03:48 PM Reply Like
  • petewd
    , contributor
    Comments (3) | Send Message
     
    auto44 you are absolutely right.
    18 Apr 2012, 10:16 AM Reply Like
  • stefan.carl@gmail.com
    , contributor
    Comments (2) | Send Message
     
    i am an investor in energy and mining. what else is there to know bout me?
    18 Apr 2012, 10:28 AM Reply Like
  • Choosh
    , contributor
    Comments (365) | Send Message
     
    To call him a pig does the porcine world an injustice.
    18 Apr 2012, 10:29 AM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    The argument that you have to give away 2.5% of the company's key balance sheet assets to keep the CEO interested is insanely stupid. Crap, what's now the difference between GAZPROM and CHK?

     

    Meanwhile lets stay focused on the $800k that GSA blew.
    18 Apr 2012, 01:13 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3530) | Send Message
     
    McClendon is a high roller. Either that makes you nervous or you admire his guts.
    18 Apr 2012, 01:29 PM Reply Like
  • muchbusiness
    , contributor
    Comments (247) | Send Message
     
    I admire his guts. The upper middle class puffs looking for an uberman to do all the heavy lifting, while they dream of great returns, are free to belly up to the entrepreneurial bar and create from nothing one of America's largest natural gas companies. It is disingenuous claptrap to assert that having a 2.5% interest in a gas well creates a conflict of interest. So, let me get this straight: Aubrey is more concerned with his 2.5% interest in wells, than he is with the value of the CHK shares he used as collateral for the loans? That this perquisite is somehow detrimental to shareholders, when it actually welds his fortune to that of Chesapeake Energy, because he will do what exactly? Use the corporate jet to fly over and inspect only those wells he has an interest in? Only sell gas from those wells in which he has a 2.5% interest? Use better grade stainless steel and more experienced work crews to maintain said wells?
    19 Apr 2012, 12:28 AM Reply Like
  • Stock Reversals
    , contributor
    Comments (219) | Send Message
     
    He already nearly bankrupted himself during the 08-09 collapse, now he borrows to the hilt again. Not only that, this is a LAND speculation company, and that JIG IS UP
    18 Apr 2012, 05:29 PM Reply Like
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