That corporate makeover, combined with a rebound in natural gas prices amid the firm’s shale gas discoveries, sent the fortunes of Chesapeake and its shareholders soaring. By mid-2008, the stock topped $66.
Another price drop
Soon after Chesapeake shares reached new heights, natural gas prices, along with much of the global economy, collapsed. In late 2008, McClendon was forced to sell nearly all of his extensive Chesapeake stock holdings to pay for loans he had taken to buy the stock.
The board, months later, awarded McClendon a $75 million bonus, and paid him $12 million for a map collection he owned that adorned Chesapeake offices. McClendon later agreed to buy back the map collection to settle a shareholder lawsuit.
Chesapeake’s 2009 shareholder meeting prompted strong words from a few shareholders, including Jan Fersing of Fort Worth, Texas, who verbally confronted McClendon.
“After your embarrassing losses, but with a carefully picked and extremely well-compensated board of directors, Chesapeake shareholder funds were partially used to cover your losses,” Fersing said.
McClendon responded forcefully.
“I’m sorry that you find me as egocentric and greedy,” McClendon said. “But I’ll tell you there’s not a harder working guy out there who thinks every day about how to create shareholder value. And I’m dedicated to that. I’ve been dedicated to it for 20 years. And as long as this board is willing to employ me, that’s what I’ll be dedicated to for the next 20 years.”
Most of the more than 200 shareholders in the room applauded him.
T. Boone Pickens recently tweeted that he likes McClendon’s willingness to invest heavily in his own company.
“Hard to be an entrepreneur if you don’t have skin in the game, and Aubrey always has skin in the game,” Pickens wrote.
In the past two years, Chesapeake has implemented new corporate governance measures and created the position of lead independent director on its board. Most recently, the board said it would hire an independent director with no previous ties to the company to serve as its new chairman.
Running the company
Dollarhide said recent Chesapeake deals have reduced debt and moved the company to a more balanced production of oil and natural gas, just as the company promised last year.
“I think they’ll make the right moves,” he said. “This is just a distraction right now, keeping them from running an energy company.”
McClendon, in a conference call last week with analysts, apologized to investors for the recent distractions.
Day, whose law firm does not represent Chesapeake, said Chesapeake leaders probably should be more concerned about the firm’s operations than the current “media frenzy.”
“Regardless of how good the management is, they have trouble coping with commodity prices which they have no control over,” Day said. “They’ve been extraordinarily successful in gathering a great natural gas base. I wish Chesapeake only the best. It’s extremely important to the well-being of this state and this city.”