Issue of the week: A fracking CEO in the hot seat

last updated 8 January 2015

Aubrey McClendon may soon be out of a job, said Sam Gustin in Time.com. The beleaguered CEO and co-founder of Chesapeake Energy—the second-biggest natural gas producer in the U.S., after ExxonMobil—has faced an angry shareholder revolt since it was revealed in April that he had borrowed $1.1 billion from the company’s lenders to buy personal stakes in Chesapeake’s wells. Amid a $10 billion company funding shortfall, calls for McClendon’s ouster have reached fever pitch, especially as natural gas prices—and the company’s stock—have plummeted. The billionaire’s case isn’t being helped by his “lavish but leveraged lifestyle,” said John Shiffman, Anna Driver, and Brian Grow in Reuters.com. McClendon has a slew of homes, antique boats, restaurants, and cellars full of “trophy wines.” But it turns out that “McClendon mortgaged much” of what he bought and then bought more, and used company resources like corporate jets for his personal benefit.

It’s time for McClendon to go, said Robert Cyran and Christopher Swann, also in Reuters.com. He’s been running Chesapeake like a “personal fiefdom” for too long, even raising insider-trading suspicions by running a $200 million private hedge fund from company offices. Last week, shareholders overwhelmingly voted down his pay package and blocked two directors from the board. That’s the “corporate equivalent of riots in the street,” and with so much anger, “it’s hard to see how [McClendon] can govern at all” anymore. Yet he still deserves “a chance to redeem himself,” said Christopher Helman in Forbes.com. Yes, he’s made shareholders pay for his perks and put the company billions in the hole. But from nothing, he’s built a company that could help deliver 100 years of clean American gas. That should be worth something, at least.

Not really, especially when shareholder activism is bursting out all over, said Ben Protess and Katherine Reynolds Lewis in The New York Times. Across corporate America, mainstream investors angry about “laggard stock performance and recent scandals” are now actively pushing companies to reform. McClendon has one possibly happy distraction, said Kirsten Salyer in Bloomberg Businessweek. This week, he was courtside when the Oklahoma City Thunder, in which he has a 19 percent stake, won the opening game of the NBA finals against the Miami Heat—in Oklahoma City’s Chesapeake Energy Arena, of all places. It’s “hardly the first stadium to suffer an awkward corporate branding.” Remember when the Houston Astros played in Enron Field?