Chesapeake Energy Corp. (NYSE: CHK) CEO Aubrey McClendon used his stake in the company’s wells to borrow more than $1.5 billion to pay for his share of the operating expenses of those wells. That is pretty well-known. What has not been so well-known is how McClendon used Chesapeake’s resources to handle millions of dollars worth of personal work.
In a special report from Reuters today, the news service says it has reviewed internal documents that show that a unit of the company, known internally as “AKM Operations”, toted up $3 million in charges in 2010 for work done for McClendon. The total rose to about $3.2 million in 2011. The work including accounting services, the use of the company’s fleet of airplanes, and engineering services.
McClendon reimburses the company for many of the expenditures, but he does that only once a year, effectively borrowing the money from Chesapeake at no interest for 12 months. McClendon also owns 19% of Oklahoma City’s NBA team and Chesapeake pays the team as much as $4 million a year for naming rights to the team’s arena. The total value of the agreement with the team amounts to $36 million.
The Reuters report also points out McClendon’s close relationship to some of the company’s board members, who are among the best paid board members in the country according to our own review of US director compensation.