Chesapeake shares slump on news of loans to CEO Aubrey McClendon

SAN FRANCISCO, Calif. - Shares of Chesapeake Energy Corp. slumped nearly nine percent on April 18 in response to a report that Chief Executive Aubrey McClendon borrowed $1.1 billion which he and the company had not previously disclosed.

McClendon secured the funds using his stake in Chesapeake's wells as collateral, Reuters said.

McClendon and Chesapeake told the media company that the loans do not pose a conflict of interest and they are private transactions.

Chesapeake shares closed on April 18 at $18.06, down 1.06 (5.54 percent) after dipping as low as $17.45 a share (8.7 percent) in intraday trading. In the past 52 weeks, CHK has declined from $35.75 per share to a low of $17.17. (Source: MarketWatch, April 18, 2012)

McClendon defends productivity of shale gas wells; Markey seeks review

Chesapeake Energy Chairman and CEO Aubrey McClendon disputes recent articles in the New York Times that claim energy companies are exaggerating production from shale natural gas wells.

Early productivity numbers and expected ultimate recoveries of such wells have been "steadily improving" and "the majority of these wells will be productive for 30-50 years, or even longer," McClendon wrote in response.

It is also "absurd to conclude that shale gas wells are underperforming while America is awash in natural gas and benefiting from natural gas prices less than half of what they averaged in 2008," he added.

Meanwhile, Rep. Edward Markey (D-Mass.), in response to the articles, asked the Energy Information Administration to review its assessment of the nation's natural gas reserves.

Chesapeake’s McClendon defends pay package in Fort Worth Rotary speech

FORT WORTH, Texas - Aubrey McClendon, president and CEO of Chesapeake Energy, defended his $112 pay package before the Fort Worth Rotary Club.
McClendon got his board to approve the package even though Chesapeake’s stock price dropped 59 percent in 2008, and profits fell by half.
McClendon was a big backer of Republican politics, helping to underwrite the Swift Boat campaign against John Kerry in 2004. He now says that he’s independent, no longer contributing to so-called 527 advocacy groups, and that he voted for Barack Obama for president.
In the Barnett Shale of Texas, Chesapeake has been a pioneer in urban drilling in Fort Worth. In his home town of Oklahoma City, McClendon is widely celebrated for creating jobs and wealth and for luring an NBA franchise.
At least four pension funds have filed lawsuits against Chesapeake in connection with the pay plan and falling stock price. They’ve called his pay "a bailout," because it came after McClendon lost 94 percent of his company stock, once worth more than $2 billion. McClendon kept buying shares in 2008, borrowing
against his stake. When natural gas prices tumbled, Chesapeake’s stock dropped, too, and McClendon’s gamble went bad. He had to sell nearly everything to meet the margin call.
Glass, Lewis, & Co., a proxy-rating service that advises shareholders, gave Chesapeake an F on its measure of pay for performance ¬ after giving the company a D in 2007 and 2008. "Overall, the company pays significantly more
than its peers," Glass Lewis wrote, "but performed about the same as its peers."
(Source: Mitchell Schnurman, Fort Worth Star-Telegram)

Shareowners outraged over Chesapeake CEO McLendon’s salary

HOUSTON - Shareholders are up in arms after learning that Chesapeake Energy Corp. paid Aubrey McClendon, its chairman and chief executive, $112 million in 2008.
On April 27, The Wall Street Journal reported that McClendon raked in a one-time $75 million bonus, a base salary of $975,000 and $32.7 million in stock, making it one of the richest pay packages for any corporate executive last year.
While Chesapeake and McClendon both declined to offer the Journal a comment, shareholders are more outspoken. "I have never seen a more shameful document than the Chesapeake proxy statement," wrote investor Jeffrey Bronchick in a letter to the natural gas company's board. "If I could reduce it to one page, I would frame and hang it on my office wall as a near perfect illustration of the complete collapse of appropriate corporate governance."