Source: Chesapeake CEO will stay
BY Staff and Wire Reports
Tuesday, January 01, 2013
1/01/13 at 4:16 AM
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Chesapeake Energy Corp. CEO Aubrey McClendon is likely to remain in place at the company he co-founded when an internal investigation of his financial dealings is completed this month, a source told The Wall Street Journal.
The internal probe of McClendon, which has been under way for about six months, could wrap up in mid-January, the source told the publication.
McClendon, who has raised eyebrows over the years for his lavish compensation and some of the strategies he has used to run Chesapeake, found himself facing a shareholder revolt last summer.
Investors criticized McClendon and the board after the CEO was allowed to pile up more than $800 million in personal loans to buy stakes in company-operated wells for his private portfolio, deals that also sparked Internal Revenue Service and U.S. Securities & Exchange Commission reviews.
In addition, his wrong bet on gas demand in late 2011 left the company with no protection against falling prices, and he has lagged behind rivals such as Devon Energy Corp. in shifting to more lucrative oil production.
To respond, Chesapeake hired former ConocoPhillips leader Archie Dunham as board chairman, shrank pay packages, eliminated perks, made other board changes and obtained a $4 billion loan to cope with tumbling gas prices and a looming cash shortfall.
Board member V. Burns Hargis, president of Oklahoma State University, is leading the internal probe of McClendon's loans that overlap with company financiers.
Some observers have questioned whether Hargis has a conflict of interest. OSU has received money from Chesapeake, including a $2 million donation last year, The Wall Street Journal reported.
In June, Hargis volunteered to quit the Chesapeake board after failing to receive a majority of shareholder votes at the company's annual meeting. The board, however, decided to keep him on in light of the investigation that was beginning. Burns is head of the audit committee.
Last month, Chesapeake offered a "voluntary separation" package to 275 employees.
This story also includes reporting by Bloomberg News.
Aubrey McClendon: The CEO and co-founder of Chesapeake Energy Corp. found himself facing a shareholder revolt last summer.