A slumping stock market forced Aubrey McClendon, the high-profile head of one of the state’s most dynamic energy companies, to sell "substantially all” of his 33.4 million shares of Chesapeake Energy stock, he disclosed Friday.
Featured Video
Advertisement
"I am very disappointed,” McClendon said in a statement issued after markets closed. "These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis.”
Much of McClendon’s estimated $3 billion fortune was represented by his Chesapeake holdings. He has interests in real estate, hedge funds and in other ventures through a venture capital fund. McClendon also is a minority owner of the Oklahoma City Thunder.
No U.S. chief executive officer has bought more of his own company’s stock in recent years than McClendon, even as the shares reached all-time highs. His appetite for Chesapeake stock made him "a darling of Wall Street,” Tulsa money manager Jake Dollarhide said. But his purchases were made on margin, meaning he used borrowed money. As the value of the stock fell, McClendon was forced to raise cash to meet margin calls. Recent losses — Chesapeake shares have plummeted 60 percent in the past three weeks — left him unable to fulfill those requirements.
McClendon has been a dynamic leader of the fast-growing company, which has carried heavy debt loads to finance its expansion.
"They have always been the risk takers, the gunslingers,” Dollarhide said. "When it has paid off, it has paid off handsomely. But in their history, shareholders have experienced a wild ride.”
It’s not known whether McClendon’s losses will affect his ownership position with the Thunder or curtail his philanthropic efforts, Chesapeake Senior Vice President Tom Price Jr. said.
"Aubrey wants to see Oklahoma grow and prosper, and through his generosity and philanthropy has done that, not just through Chesapeake Energy and the corporation, but personally and directly,” Price said. "And when the situation has righted itself, he will continue to demonstrate his leadership and charitable heart.”
‘My confidence ... remains undiminished’
Despite his losses, McClendon, 48, said he still believes in Chesapeake, the nation’s largest producer of natural gas.
"I have been the company’s largest individual shareholder for the past three years and frequently purchased additional shares of stock on margin as an expression of my complete confidence in the value of the company’s strategy and assets,” McClendon said in his statement. "My confidence in Chesapeake remains undiminished, and I look forward to rebuilding my ownership position in the company in the months and years ahead.”
Bob Rader, senior vice president of Capital West Securities, said he was saddened by McClendon’s loss.
"It’s unfortunate, but that’s personal,” Rader said. "It doesn’t affect the company.”
McClendon remains among the nation’s highest-paid executives, earning a compensation package last year valued at $25.5 million.
Chesapeake announced on Friday that it is planning to sell assets and cut back on its land-leasing program that has fueled the company’s impressive growth.
Thank you for joining our conversations on NewsOK.com. We encourage your discussions but ask that you stay within the bounds of our terms and conditions. Please help us by reporting comments that violate these guidelines. To review our rules of engagement, go to Commenting and posting policy.
Editor's note: It is not our intent to offer comments on crime or fatality stories.
Leave a comment.
Log in below or sign up (it's free).
The irony of this fall is amazing. It was well known that if the Robber Barron owners didn't find a way to buy themselves out of Seattle they would not have survived two years of bleeding but we never guessed they wouldn't make it to the next season.
With Aubrey the #1 stock holder, Tom Ward the #2 and Clay Clay #4 the ownership group took a major bath. Aubrey went from being worth $2 billion to being a "run of the mill" millionaire worth about $30 million. Clay Clay at least has more of his wifes fortune to suck off of but the rest are going to be hurting big time.
The cash calls for the Robber Barrons could break these guys. One thing for sure, if they didn't own the team already they couldn't buy one now, they are no longer "NBA qualified" ownership.
Chesapeake has to really scramble right now. They have been agressively spending around the country with major projects leveraged on the high stock price and skyrocketing energy prices. With the crash in the stock, lower demand, and plumeting prices they could end up having to liquidate.
Karma always comes back to bite those that screw over others.
The Seattle investors haven't been hit too badly by the "unforeseen" economic crisis. They may still be interested in buying back the franchise at say a 50% discount. Seattle may be willing even to write-off the $40 million the franchise is still on the hook for. Of course, it goes without saying that the Thunder name and history will be allowed to stay in OKC in exchange for the termination of the lease.
It sad to hear so many people say Chesapeake in going under when they just dont have the facts right. Yes Chesapeake carried some debt, but they also have billions in cash reserves and they have something called assets. They own more natural gas producing land and wells than any other company in the US. This shows what a strong position the company is really in. They also had the foresight to see these times coming, which is why they started scaling back there drilling months ago. The stock price during these times doesn't acurately represent the value of a company. It just shows the state of panic investors are in right now. There will be a lot of people this time next year that will wish they hadn't sold there stock.
Cash, you're absolutely right. Didn't mean to make things sound so insensitive. It's just that OKC just got this basketball team and I'd at least like to see it survive more than a year. If there happens to be anything left in my retirement account, I'd at least like to get back there to see one game while they're still in existence. Money's important, but it's not the end all scenario.
Oklahoma is recession proof, remember? Anybody out there live through the 80's? We'll get a little pull back in the economy, but it'll be back in 2028.
Charles, I find people like you who are so "disgusted" with gay people, typically have some, uh, tendencies if you will.
(See link: http://en.wikipedia.org/wiki/Ted_Haggard#Teachings_on_homosexuality)
It's OK to be gay, Charles. Come on out.
hey Jackson, we are in a major financial crisis and you are wondering about the Thunder?? People are losing their homes and retirements but maybe the Thunder will thrive?? wait till the big dominoes fall & maybe you will have enough money left to buy a Thunder ticket
only 3 billion worth???? he probably only has a billion or so left.......... he should feel my pain...........thats life Aubrey
you win some & lose some...............
I respect and praise Aubrey McClendon's contributions to his community. It is very sad to hear of this news, but it appears even the most educated and brightest still are able to commit the most damaging financial sin there is which is nondiversification of one's assets. It brings to mind the Enron debacle. Anyway, glad to hear that Chesapeake will still be strong. And hopefully, the newly arrived Thunder basketball team will still thrive.
Charles of Tulsa, I just thought you were a racist. Now, I find that you're also a homophobe, If you really work at it, can't you find still another group to insult and belittle?
"McClendon remains among the nation’s highest-paid executives, earning a compensation package last year valued at $25.5 million." Yes he has lost a lot ($3B or so) but he is far from destitute (yes, I am sure a lot of his $25.5M is tied into stock of the company). Point is, he will survive and making millions and billions more. Have nothing against the man or any of the "rich" (never worked for a poor person for very long). It is sad to see how this could effect many in this City and State (while it may not be a negative for the Company, don't see how this could be a positive for Chesapeake in any way, but if someone would like to explain it, feel free). Think I remember reading how Trump has gone from multi-millionaire to nothing a few times over the years.
"The negative responses of so many people to news like this is a shame. Unfortunately, I'm afraid it reflects base aspects of human nature--mostly, jealousy and greed."
Agreed Common Sense...Okies rooting against one of their own...Classy
After reading several of these comments, I am extremely frustrated. I am so disappointed to read apparent uneducated and uninformed Oklahomans celebrating one of our outstanding citizen's financial problems due to an unforeseen economic crisis. Mr. and Mrs. McClendon's contributions to our community are immeasurable; their philanthropic support has been tremendous. Chesapeake is still a very strong company and provides many jobs and additional support to our city, state, and nation. I appreciate Mr. McClendon’s hard work and personal faith in his company. I have no doubt he will continue to be a strong economic engine for us and a great spokesman for the natural gas industry which still has an incredibly bright future.
Poor, poor Aubrey. This will be another big company that goes belly-up, sending its employees to the poor house while the CEO bails. Sure, his stock options aren't worth what they were a month ago, but he'll still be personally worth tens of millions of dollars.
I hope I'm wrong, but this could be very bad for Chesapeake's employees and the Oklahoma economy.
This brings to mind one of the old rules of business, "always make money with someone else's money". I believe this is a prime example of one of the possible outcomes when one applies this rule in practice.
I am sure that Aubrey knew this could possibly happen, however at that time the possible gains far outweighed the potential negative outcome. You cannot fault someone for this type of thought process. There are people that choose to operate in high risk mode and other that choose the low risk mode. Aubrey makes it clear he is the visionary for Chesapeake and as such, the way Chesapeake operates is a reflection of his high risk mode.
The downside of Aubrey's decision to purchase stock in this manner has come to a reality. It is easy to look at this and allow your feelings to go negative towards Aubrey and attack. However, the upside of this mode of operation should not be over looked. Aubrey and Chesapeake have provided many positives for the City, State and the Nation, in a very short amount of time. The positive effects associated with this type of operation should also be kept in mind. Our great City and State would not be this far progressed without the added benefits of Chesapeake. For sure we can never forget what happened during the previous energy bust and yes, history could and probably will, repeat itself. The important thing is to take full advantage of the upside and to always be prepared for the downside and not be so close minded to think that the negative side of the decisions will never become reality.
What happened to Aubrey is his own doing and I am sure he has a recovery plan. I don't think it merits either negative or positive strokes. Just recognize the facts, learn from them and apply that to your own mode of operation.
The negative responses of so many people to news like this is a shame. Unfortunately, I'm afraid it reflects base aspects of human nature--mostly, jealousy and greed.
People like McClendon are the innovators in our society. They have attributes that many others don't, including the ability and willingness to take risks. When the risks pay off, they make money for themselves and, to the delight of even the negative posters to this blog, make money for others by creating jobs, paying taxes, etc. When the risks don't pay off, they lose--and those losses can be large.
Those who celebrate when others take risks and lose seldom stop to think where we would be without people like McClendon. His company is directly responsible, among other things, for thousands of jobs both in OKC and around the country, reinvigorating the local economy, and funding numerous charitable endeavors. Without companies like his, those who take so much comfort in his losses wouldn't have an NBA team to cheer for, wouldn't have entertainment from the off-Broadway shows that come to the Civic Center, wouldn't have concerts to enjoy at the Ford Center, wouldn't have things like the Myriad Gardens to enjoy, may not have jobs, etc. etc. etc.
I have no idea about McClendon's personal financial situation, though I suspect he is likely still worth billions. Regardless, he will be back--and likely will be creating wealth and jobs and paying taxes for years to come, and the fruits of his labors will long be enjoyed by all negative posters to this site.
If he were living within his means, like everyone in this country is fixing to learn how to do, he would not have borrowed money to buy stock. That's just crazy! If you can't afford it, don't buy it...oh yea, that just applies to regular folks, not the rich. We'll be bailing him out next.
He built Chesapeakopolis with nothing but borrowed money. The whole billion dollar complex is all leveraged 100 percent. The good thing is that Bishop McGuinness is now on much safer terms today than it was a couple days ago. Chesapeake had already purchased homes South of the school and the fuel station at the corner. Survey crews were walking around the school grounds and making new maps. One surveyor said that they wanted to keep all their options open and it was a prime piece of real estate for continuation of the company headquarters. They would have made McGuinness a fair deal for the school. They also started buying property between Western, Grand, and Belle Isle. They were even starting to threaten Pearl's after they got torn down and moved. The property across the street from Pearl's is up for negotiation with Chesapeake's land company. The entire neighborhood between Belle Isle and Western and I-44 is up for corporate eminent domain proceedings. Also the triangular area between Grand, 63rd, and Western. The place where "The Varsity" and later the Grand Ave. Grill once stood is already under Chesapeake ownership. We were looking to locate there for an office and they said it was going to be destroyed by 2009. Then there is One Grand Place and all the buildings around it including the old Oklahoma Builders Association building. Not to mention a 15-million dollar church in Nichols Hills they bought. Something had to give as the piggy bank had to run out eventually
I hate to even associate myself with the ignorant comments below but I must chime in on this article. Whoever is commenting negatively against Aubrey McClendon is absolutely ignorant of the situation or just a plain insecure, idiot. The financial market is affecting everyone and it is disappointing that leader in McClendon had to take a hit. This man not only has done revolutionary things in the energy industry but has helped reform our city and business community. A hit to Aubrey is a hit to our city and we should stay positive about it. He's a leader and this all will work out. To make negative remarks about him is not only ignorant but is utterly a joke.
McClendon is the largest percentage Owner of the Thunder!! Bennett is a minority owner but is Chairman of the Board because he has the knowledge of the NBA Business and was a previous minority owner of the Spurs but McClendon in a sense "Owns" the team.
History repeats itself. Obviously, McClendon doesn't remember the oil boom and bust of the late 70's and early 80's that happened in Oklahoma and the failure of Penn Square Bank. Tough lesson to learn.
I am not qualified to judge how well or how poorly McClendon has guided Chesapeake's or his own finances. I simply know that the man has done a great deal for the community and has been a forward-looking visionary with respect to some of our nation's problems.
Even if I had reason to dislike him, and I do not, I would regret his financial troubles at a time when many of us are sharing them to varying degrees. When our nation is in peril is no time to enjoy the resulting misery of any of its citizens.
I think a wise move would be to cut 25.5 million in salary before you begin selling assets and cutting back on your land-leasing program. Matter of fact, maybe Aubrey should give back about 4 years salary to help get Chesapeake back to zero for a starting point.
McClendon had to 'involutarily' sell his wildly over leveraged stock. Chesapeake,according to Standard and Poor's is the worse producing oil company in the US.Aubrey by his terrible decisions has turned this company into a debacle.Read the Bloomberg coverage of this jerk.
Hey Lynn, I bet that many folks in Seattle will see the THUNDER playing in OKC. They can read poetry while we watch Basketball. You MORON, Chesapeake isn't affected, Mr McClendon is a Billionaire. The Thunder isn't affected either. Seattle might make a good home for you. You could pretend to enjoy false Poetic justice, how awesome.
Steve, Edmond
Aubrey McClendon has been one of the finest business people in the State when it comes to contributing to the growth, health and vitality of the entire State. I hope his current financial losses are overcome by dynamic growth and personal profits after the correction of world markets. I am bullish on Aubrey McClendon
Other articles have said McClendon was an equal owner of the Thunder (this article says he is a minority owner). Know Bennett is the out-in-front spokesman for the ownership group (another article said Bennett was a minority owner too, and was just the ownership's spokesman).
Chesapeake curbs operations 10/11/2008 Chesapeake Energy Corp. said Friday it will make additional operational cuts for the remainder of this year, 2009 and 2010 while it raises cash by selling...
Market slide wipes out CEO’s Chesapeake holdings 10/11/2008 A slumping stock market forced Aubrey McClendon, the high-profile head of one of the state’s most dynamic energy companies, to sell "substantially...
Bush: US will work with partners on credit crisis 10/11/2008 WASHINGTON - President George W. Bush emerged from a meeting with foreign financial officials on Saturday and pledged a global response to the credit crisis...
Mazda says no decision on sale of Ford's stake 10/11/2008 TOKYO - Mazda denied Saturday that a decision had been made by troubled Ford Motor Co. to sell its stake in the Japanese automaker, but didn't rule out a...
French, German leaders reject European rescue fund 10/11/2008 COLOMBEY-LES-DEUX-EGLISES, France - French President Nicolas Sarkozy and German Chancellor Angela Merkel have rejected creation of a common financial rescue...
Source: Chrysler, GM discuss merger, acquisition 10/11/2008 DETROIT - General Motors Corp. and Chrysler LLC have held preliminary talks about a merger or an acquisition of Chrysler by GM, according to published...
All that money you've lost - where did it go? 10/11/2008 NEW YORK - Trillions in stock market value — gone. Trillions in retirement savings — gone. A huge chunk of the money you paid for your house, the money...
US enemies in Mideast gloat over financial crisis 10/11/2008 CAIRO, Egypt - America's opponents in the Middle East are gloating over the financial meltdown in the United States, painting it as divine retribution for...
40
Featured Video
Thank you for joining our conversations on NewsOK.com. We encourage your discussions but ask that you stay within the bounds of our terms and conditions. Please help us by reporting comments that violate these guidelines. To review our rules of engagement, go to Commenting and posting policy.
Leave a comment. Log in below or sign up (it's free).Editor's note: It is not our intent to offer comments on crime or fatality stories.
With Aubrey the #1 stock holder, Tom Ward the #2 and Clay Clay #4 the ownership group took a major bath. Aubrey went from being worth $2 billion to being a "run of the mill" millionaire worth about $30 million. Clay Clay at least has more of his wifes fortune to suck off of but the rest are going to be hurting big time.
The cash calls for the Robber Barrons could break these guys. One thing for sure, if they didn't own the team already they couldn't buy one now, they are no longer "NBA qualified" ownership.
Chesapeake has to really scramble right now. They have been agressively spending around the country with major projects leveraged on the high stock price and skyrocketing energy prices. With the crash in the stock, lower demand, and plumeting prices they could end up having to liquidate.
Karma always comes back to bite those that screw over others.
(See link: http://en.wikipedia.org/wiki/Ted_Haggard#Teachings_on_homosexuality)
It's OK to be gay, Charles. Come on out.
you win some & lose some...............
Tell Oral I said hey
Enough said. Go Chesapeake!
Agreed Common Sense...Okies rooting against one of their own...Classy
I hope I'm wrong, but this could be very bad for Chesapeake's employees and the Oklahoma economy.
I am sure that Aubrey knew this could possibly happen, however at that time the possible gains far outweighed the potential negative outcome. You cannot fault someone for this type of thought process. There are people that choose to operate in high risk mode and other that choose the low risk mode. Aubrey makes it clear he is the visionary for Chesapeake and as such, the way Chesapeake operates is a reflection of his high risk mode.
The downside of Aubrey's decision to purchase stock in this manner has come to a reality. It is easy to look at this and allow your feelings to go negative towards Aubrey and attack. However, the upside of this mode of operation should not be over looked. Aubrey and Chesapeake have provided many positives for the City, State and the Nation, in a very short amount of time. The positive effects associated with this type of operation should also be kept in mind. Our great City and State would not be this far progressed without the added benefits of Chesapeake. For sure we can never forget what happened during the previous energy bust and yes, history could and probably will, repeat itself. The important thing is to take full advantage of the upside and to always be prepared for the downside and not be so close minded to think that the negative side of the decisions will never become reality.
What happened to Aubrey is his own doing and I am sure he has a recovery plan. I don't think it merits either negative or positive strokes. Just recognize the facts, learn from them and apply that to your own mode of operation.
People like McClendon are the innovators in our society. They have attributes that many others don't, including the ability and willingness to take risks. When the risks pay off, they make money for themselves and, to the delight of even the negative posters to this blog, make money for others by creating jobs, paying taxes, etc. When the risks don't pay off, they lose--and those losses can be large.
Those who celebrate when others take risks and lose seldom stop to think where we would be without people like McClendon. His company is directly responsible, among other things, for thousands of jobs both in OKC and around the country, reinvigorating the local economy, and funding numerous charitable endeavors. Without companies like his, those who take so much comfort in his losses wouldn't have an NBA team to cheer for, wouldn't have entertainment from the off-Broadway shows that come to the Civic Center, wouldn't have concerts to enjoy at the Ford Center, wouldn't have things like the Myriad Gardens to enjoy, may not have jobs, etc. etc. etc.
I have no idea about McClendon's personal financial situation, though I suspect he is likely still worth billions. Regardless, he will be back--and likely will be creating wealth and jobs and paying taxes for years to come, and the fruits of his labors will long be enjoyed by all negative posters to this site.
i see nothingk
Even if I had reason to dislike him, and I do not, I would regret his financial troubles at a time when many of us are sharing them to varying degrees. When our nation is in peril is no time to enjoy the resulting misery of any of its citizens.
Steve, Edmond