Oklahoma City businessmen Aubrey McClendon and Tom Ward each have a reputation of spending big, betting high and supporting Oklahoma City.
The CEOs at Chesapeake Energy Corp. and SandRidge Energy Inc. have created thousands of local, high-paying jobs, spent millions on local charities and community efforts, and helped bring in and support the Oklahoma City Thunder.
Chesapeake and McClendon have developed restaurants and shopping centers around the company's north Oklahoma City headquarters, including Classen Curve, Classen Triangle and Nichols Hills Plaza.
SandRidge and Ward have transformed part of downtown into SandRidge Commons, which includes park space and public restaurants.
Both companies also have sponsored buildings and events along the Oklahoma River, including the Chesapeake Finish Line Tower, the SandRidge Sky Trail and the SandRidge Cup Championships.
Both men also have drawn intense opposition in recent months from shareholders who have accused them and their corporate directors — among other things — of wasteful spending and not focusing enough on the companies' core businesses.
Dissident shareholders have taken control of Chesapeake's board and are poised to do the same at SandRidge.
Chesapeake CEO and co-founder McClendon is set to leave his company April 1.
SandRidge's newly expanded board is conducting an internal review over whether to keep Ward, who co-founded Chesapeake with McClendon. If the SandRidge directors do not oust Ward by June 30, the board will reorganize, giving the dissident shareholders even more control.
Both dissident shareholder groups have called on the companies to reduce their nonoperational spending.
Chesapeake said in January that it has cut its annual budget for charitable, trade association and political expenses by about 30 percent in 2013, 40 percent in 2014 and 50 percent in 2015.
“We know our success is a direct result of the strength, goodwill and vitality of Oklahoma City and all the communities where we operate,” Chesapeake spokesman Michael Kehs said Friday. “Our support of local communities and organizations goes well beyond financial contributions and includes volunteer hours, mentoring, public education efforts, employee contributions and in-kind donations. Our commitment to being a helpful and engaged corporate citizen will continue.”
A SandRidge spokesman did not respond to requests for comment Friday.
SandRidge shareholder TPG-Axon has called for the company to reduce overhead spending by as much as 75 percent. Besides salaries and bonuses, TPG-Axon also cited SandRidge's spending on planes, buildings, advertising and luxury suites.
In an open letter to SandRidge employees earlier this month, however, the shareholder group clarified its stance, stating that “much of the overhead expenses we object to has nothing to do with community support, but rather are enormous expenses directed toward the vanity, privilege and compensation of a few.”
Supporting the city
Greater Oklahoma City Chamber President Roy Williams on Friday praised both McClendon and Ward for their focus on the community.
“The leaders of both companies, Aubrey and Tom, were key to getting the Thunder here. The companies have been supportive of not only that component of the community, but also the other charitable and civic causes both through their own involvement and encouraging their employees' involvement,” Williams said. “They've been leaders in tutoring and mentoring and volunteering. There's been a culture that has developed from both companies that has stemmed from the leaders about the importance of community.”
The changes at both companies have created uncertainty throughout the community, Oklahoma City Mayor Mick Cornett said.
“Whether it's a sports team or a large company, you almost always prefer local owners to out-of-town owners,” Cornett said. “If they're run by hedge funds that are primarily run by out-of-town interests, that distances them from our leadership. It shouldn't necessarily be viewed as cataclysmic. We're just going to have to wait and see.”
While out-of-state hedge funds exert control over both Oklahoma City boards, Williams said the CEO has the most influence on community involvement.
“I think the CEO is critical,” Williams said. “The board has to approve it and support it, but we don't generally see where the boards of our companies drive corporate commitments. The CEO drives corporate community involvement. The board may create limitations through the budgeting process, but by and large, they don't tend to get involved in the day-to-day running of the business.”
While most large companies have some community involvement, it's not always the same, Williams said.
“We have other CEOs who are here who are nowhere nearly as involved in our community as these two CEOs have been,” Williams said. “Not every company is the same. You can't expect every company to be as engaged as these two individuals have had their companies be. Most every company is going to do something. It's the extent of involvement you never know about.”
It is still too early to know how the leadership changes at Chesapeake and SandRidge could affect the community, Cornett said.
“I think people fear the unknown. I don't have any information that leads me to believe they won't still be supportive of our efforts of what the city wants to do,” Cornett said. “But change can cause concern, and that's what you're seeing.”
Remaining good neighbors
McClendon has not publicly announced his future plans, but county records indicate a company he recently formed, Arcadia Capital LLC, recently took out a $200,000 building permit for the sixth floor of the Harvey Parkway Building, 201 NW 63, which Chesapeake owned until January.
Ward last week raised $20.8 million when he sold more than 3.6 million shares of SandRidge stock. The sale was Ward's largest in the past year, according to a review of his SandRidge stock transactions.
Analyst Mark Hanson agreed that both companies likely will continue investing in Oklahoma City as long as they have a presence in the community.
“I can't imagine they'd want to alienate and disenfranchise the community in which a lot of their people work,” said Hanson, an analyst with Morningstar in Chicago.
Hanson pointed out that even with the changes that have happened already at Chesapeake, many of the services offered to employees have continued.
Hanson said he would not expect significant changes even if the companies were sold.
“It might not be optimal from a cost point of view, but you certainly aren't going to upset things when it's essentially a rounding error,” he said. “The naming rights for Chesapeake Arena is couch change for Shell or someone like that.”