Chesapeake Energy Corp. (NYSE: CHK) has been the subject of many media and shareholder attacks after the news of well participation by co-founder Aubrey McClendon surfaced in 2012. Prior to that, things had been dicey on and off before due to margin calls against McClendon’s shares and loans made to him.
After a $45 million “retirement package” was awarded to McClendon earlier this year, the company was still reviewing the practices of its retiring co-founder CEO and former chairman. The company says that the “extensive review” of the alleged conflicts of interest and “other matters involving CEO Aubrey McClendon” did not find any intentional misconduct.
We found this story so fascinating that we did a review of the other most lucrative CEO retirement packages in modern times from corporate America. Many other CEOs took much larger retirement packages, and that list was only of non-founding CEOs. Still, this was a huge “retirement” package, which we are considering a firing for all practical purposes.
The review issued today is simply a CYA move by Chesapeake’s board of directors. If you are not familiar with the CYA term, let’s just take the nice road and say that this was a “cover your ass(ets)” announcement. Chesapeake said that no intentional misconduct by McClendon or any of the company’s management was found by the board concerning these relationships and/or these transactions and issues.
The Audit Committee of the Chesapeake board led the review, and it had the assistance of independent counsel retained by the independent members of the board in April 2012. Millions of pages of documents were collected and reviewed, and more than 50 interviews of Chesapeake and third-party personnel were conducted. This review is now completed, according to the company, and did “not reveal any improper benefit to Mr. McClendon or increased cost to the company as a result of the overlap in the financial relationships.”
Other issues were covered in the review as well. These include other relationships in which both McClendon and the company conducted business with the same financial institutions. Another aspect covered was the trading activities of McClendon’s Heritage Hedge Fund through 2007.
The long saga of Chesapeake and McClendon is almost over. Chesapeake shares are down 0.2% at $20.32, against a 52-week range of $13.32 to $26.09.
Jon C. Ogg