McClendon steps down as Chesapeake Energy chairman
OKLAHOMA CITY — Chesapeake Energy Corporation announced Tuesday that Aubrey McClendon is stepping down as Chairman of the board.
The changes follow news last week of a possible federal investigation into the energy giant and a company perk that allowed McClendon to have a personal stake in Chesapeake’s gas wells.
McClendon will still run the company as CEO.
stock prices went up after Tuesday morning’s decision.
Some believe Chesapeake is relenting to investor pressure by removing McClendon as chairman and ending a program that gave him stakes in thousands of their oil and gas wells.
The announcement also comes in the wake of a Reuters report that stated McClendon received over a billion dollars in personal loans, using his ownership stake in the company’s wells as collateral.
“He had to pay the startup costs of doing that which meant he didn’t have the money,” legal analyst David Slane said. “So he had to borrow the money to invest and that’s what he did with the $1.4 billion.”
Slane said four lawsuits have been filed against the company in the last month, one being a class-action suit on behalf of company shareholders.
In one lawsuit, it alleges, “by year end 2011, McClendon had amassed personal debt on Chesapeake-related wells and parties exceeding $1 billion. The sizeof the debt… represented… undisclosed risks to their investors.”
Another lawsuit claims, “In order to generate the revenue to make his loan payments, McClendon has an incentive to direct the company to continue producing gas at any cost.”
“Mr. McClendon, however, needs to make a loan payment on that $1 billion loan,” Slane said. “Some say he’ll just keep drilling because he needs to make the profit to pay the loan.”
Oklahoma Christian VP of Academic Affairs, Allison Garrett, said McClendon using his personal stake in those wells as loan collateral was aligned with the company’s interest in those wells, too.
“The question might be, was there some arrangement between him and the organizations that were loaning him the money,” she said.
She said time will tell if there was a conflict of interest and if shareholders were appropriately informed of his loans.
“We’ll learn whether the disclosure was sufficient,” Garrett said. “There certainly was disclosure. Whether it was enough disclosure really is, in my mind, the question.”
In a statement, McClendon said, “I am completely supportive of the board’s plans to separate the positions of Chairman and CEO and to bring an independent chairman onto the board. This action reflects our determination to uphold strong corporate governance standards and will also enable me to focus my full time and attention on execution of the company’s strategy, the implementation of our transformation into a major oil producer and the completion of our asset monetization and joint venture objectives.”
The SEC is investigating Chesapeake’s program that gave him a share in each of the company’s wells.