Chesapeake Business Practices

[blangtang]

but...but...he's helping to bring Whole Foods to the employees! Isn't that about how it goes in this town?

Or, how about, without McClendon and his cronies on the board, CHK wouldn't have been afforded the privilege of owning an expensive, exotic map collection. The wine is another story.

Wasn't there an article recently ragging on Tom Ward of SD as well for being over compensated, like compensated similarly to the CEO of Exxon Mobil, etc.

[OKCTalker]

I'm trying to see the whole picture here: Aubrey took CHK from nothing to billions, and while he did it mostly with OPM, he and Katie have a ton of skin in the game. Both are heavily invested (time & money) in Oklahoma City business, education, philanthropy, the arts and culture (just look at Bill Gumerson's contributed piece in today's DO praising Aubrey's leadership in bringing the ProCure Proton Therapy Center to OKC). Yes, CHK could be more transparent, use better compensation practices, etc., but if we're going to make this all about tearing down Aubrey McClendon, don't forget that there's a lot of him worthy of being held up.

[Doug Loudenback]

From Forbes today (6/10/11): http://blogs.forbes.com/christopherh...felt-the-heat/

It’s High Time Chesapeake’s McClendon Felt The Heat
by Christopher Helman
Aubrey McClendon, the billionaire co-founder of natural gas giant Chesapeake Energy has responded to pressure from grumpy shareholders and proxy advisory firm Institutional Shareholder Services to overhaul the way Chesapeake doles out unwarranted and unprecedented riches to him. On Thursday, ahead of today’s annual meeting, the company agreed to put in place a policy of awarding McClendon (and other execs) according to his performance, rather than just because of his kingly position, august bearing and sweetheart relationships with his hand-picked board members. Too little, too late. Shareholders should follow the recommendation of ISS and refuse to reelect McClendon to Chesapeake’s board of directors.
* * *
The highest profile among dozens of complaints against Chesapeake involved Oklahoma bilionaire Harold Hamm, ceo of Continenatal Resources (see: Chesapeake Lawsuits Pit Billionaire Against Billionaire). McClendon personally arranged a contract the Hamm for Chesapeake to buy Continental’s acreage in Michigan, then months later tried to weasel out of the deal without paying anything. Hamm sued Chesapeake for $20 million, the value of the contract. McClendon settled that case with Hamm a month or so ago, with Chesapeake finally paying what it owed and McClendon trying to make amends. Hamm is a big enough guy to stand up to McClendon and win; smaller fry will face years of legal wrangling. A small operator, Frontier Energy, has sued Chesapeake for welshing on $24 million in contracts. Other plaintiffs include pensioners and farmers who bought new equipment in anticipation of Chesapeake’s money coming in, only to lose their farm when Chesapeake refused payment.
* * *

[Pete]

It's entirely possible to respect and appreciate what McClendon and CHK have done for the community and it's employees while also being concerned about steady independent reports and opinions about the company's spending habits, compensation and governance.

It's also entirely possible to run an innovative, fast-growing successful company without absurd salary packages for the top brass and constantly calling attention to yourself in a less than positive way.


As much as everyone loves Aubrey and Chesapeake for what they have done for OKC and still plan to do, the simple fact is that the community has a real stake in their long-term viability and there seems to be a steady stream of these types of articles while other companies (like Devon) flourish with hardly a ripple of criticism.

[MikeOKC]

AM and Nickles survived - but the message was sent. 78% voted for AM. He received around 98% last time. In the financial world of corporate governance, 78% is actually a scare.

Here's the first I've seen of news on the web:
http://www.ft.com/intl/cms/s/0/50290...#axzz1Ov9XwdOi

I'll leave it at this....now that the shareholders have not taken care of their own housekeeping, the SEC's official investigation into CHK practices begins in 3....2....1....

[urbanity]

'Peake performance

Aubrey McClendon retains his Chesapeake CEO position, despite an advisory firm's recommendation.

http://www.okgazette.com/oklahoma/ar...html#dComments

[Snowman]

'Peake performance

Aubrey McClendon retains his Chesapeake CEO position, despite an advisory firm's recommendation.

http://www.okgazette.com/oklahoma/ar...html#dComments

Rarely do outside shareholders vote, unless their is several of the key investors already against them (which will come over time not some story published shortly before a vote) or major internal conflict does any CEO get fired/not elected.

[MikeOKC]

'Peake performance

Aubrey McClendon retains his Chesapeake CEO position, despite an advisory firm's recommendation.

http://www.okgazette.com/oklahoma/ar...html#dComments

One of the most eye-opening things in this entire drama is told beautifully in the Gazette article you linked to. The no-coverage decision by The Oklahoman was a big step back to the days of E.K. and Edward Gaylord - playing like the old Pravda (Problems? What problems?). I have grown to respect and appreciate a lot about the newer Oklahoman, so to see this blatant pandering to Aubrey McClendon with his hometown newspaper not covering (censoring) what was a major corporate business story nationally was very disappointing.

[MikeOKC]

CHK is center stage in page one NYT piece, Sunday, 6-26-01.
Posted story as it concerns a lot more than CHK in Current Events/Open Thread:
http://www.okctalk.com/showthread.php?t=26245

[knightrider]

Looks like AKM is out as Chairman. This is good news from shareholder standpoint. He'll still be "very involved" with the board I'm sure.

http://dealbook.nytimes.com/2012/05/...r=yahoofinance

[okc_bel_air]

Chesapeake announced in emails to their staff they are starting a "Voluntary Separation Program". Rumors are they are looking to shed 10% of the workforce, local and national.

[HangryHippo]

This is the article that talks about the program. I really hope Chesapeake can get it together. Things do not look good.

[onthestrip]

This is the article that talks about the program. I really hope Chesapeake can get it together. Things do not look good.

Ive been quite critical of them in the past but I dont see this as a sign that "things do not look good." If anything this is a positive for them as they shed some costs. And this is only for employees that are 55 and up and have been there for 5+ years, so its not a large amount of employees. For those employees, the severence package looks to pretty good. And it looks like they have almost raised the amount of money they needed to with the selling of assets this year. Only thing is that they are going to have to do it again in 2013. The new board and big shareholders have reigned in Aubrey's big spending so things are looking somewhat better for them.

[simbaokc]

How many Anadarko people have turned in their resignations to take those spots and others upcoming?

[PhiAlpha]

How many Anadarko people have turned in their resignations to take those spots and others upcoming?

They wouldn't have to be from Anadarko. The guy has been in the industry 20-30 years, I'm sure has connections to people at many companies in the industry.

[bombermwc]

CHK is also moving more into the fracing world outside of their own in-house operations. They recently bought into a company based in Houston but that has one of their larger operations centers in Chickasha. I have a friend that has been working for Frac Tech for a few years now. Word is an IPO is on their radar soon, but if CHK is getting their paws in the mix, who knows.

From what I understand, FracTech is a great one to side with though for CHK. They use a mixture that is NOT harmful and all the stories you hear about groundwater contimination are apparently done by pretty crappy companies that do little to look at the environmental side. So in terms of being clean and green (as far as you can be when you're sucking crap out of the ground), they at least chose a good company to side with.

http://uk.reuters.com/article/2011/0...21850820110509

[soonerguru]

CHK is also moving more into the fracing world outside of their own in-house operations. They recently bought into a company based in Houston but that has one of their larger operations centers in Chickasha. I have a friend that has been working for Frac Tech for a few years now. Word is an IPO is on their radar soon, but if CHK is getting their paws in the mix, who knows.

From what I understand, FracTech is a great one to side with though for CHK. They use a mixture that is NOT harmful and all the stories you hear about groundwater contimination are apparently done by pretty crappy companies that do little to look at the environmental side. So in terms of being clean and green (as far as you can be when you're sucking crap out of the ground), they at least chose a good company to side with.

http://uk.reuters.com/article/2011/0...21850820110509

This is what I've suspected. Let's be honest, here. Fracking is a potential environmental disaster and water is a precious resource. This is why I don't understand why responsible owners like Chesapeake and Devon are so hostile to regulation. To me, regulation protects responsible operators and provides punishment to those who do it wrong. Virtually every industry that "self regulates" fails at doing so, and energy companies are notoriously bad at it.

[ou48A]

This is what I've suspected. Let's be honest, here. Fracking is a potential environmental disaster and water is a precious resource. This is why I don't understand why responsible owners like Chesapeake and Devon are so hostile to regulation. To me, regulation protects responsible operators and provides punishment to those who do it wrong. Virtually every industry that "self regulates" fails at doing so, and energy companies are notoriously bad at it.

Many problems that are attributed to a bad frac job are really a bad Cement job.
There are very few problems with fracing and what few there are often highly exaggerated.


There is a micro cap Canadian Co called GASFRAC (GSFVF) who issued its IPO several months ago who uses no water in its frac jobs.
They claim a lower overall cost for several reasons. There is no water disposal..... Because there is no de watering the well can be put on line quicker and there is no wasteful flaring.
GASFRAC says that its frac jobs can achieve up to 20% better well production. They use far fewer vehicles and associated equipment.
However unfounded they are…… there is no reason to fear ground water contamination. For reasons that have nothing to with graound water contamination GASFRAC is a greener way to frac.
GASFRAC uses propane that is liquefied instead of water. Most of the propane is recovered, what is not is sent down a pipeline.

GASFRAC is a company that is so small that it’s not very well known company nor is its method of fracing.

[blangtang]

A. McClendon is scheduled to be interviewed on CNBC this afternoon during Jim Cramer's Mad Money.

[dankrutka]

A. McClendon is scheduled to be interviewed on CNBC this afternoon during Jim Cramer's Mad Money.

How'd it go?

[blangtang]

hmm, i think it was good.

A.M said they are gonna hire 2000 people this year and average compensation of those jobs is ~75K/year

they discussed energy policy in the US, how CHK is increasing their dividend, and how they are one of the biggest drillers in the world...

I can't remember, maybe Cramer said to buy the stock!

[Pete]

CHK fires back at the NYT:

Chesapeake Energy Corp. CEO Aubrey McClendon has responded to what he considers to be a misleading article published Sunday in the New York Times.

Read more: http://newsok.com/chesapeake-strikes...#ixzz1QWQOLbjG

[MikeOKC]

CHK fires back at the NYT:

Isn't it interesting how The Oklahoman goes to bat for Aubrey, but - literally - not a peep concerning the the national news story after the ISS recommended his ouster from the board of directors? I said then, and I still believe, The no-coverage decision by The Oklahoman was a big step back to the days of E.K. and Edward Gaylord - playing like the old Pravda (Problems? What problems?). I have grown to respect and appreciate a lot about the newer Oklahoman, so to see this blatant pandering to Aubrey McClendon with his hometown newspaper not covering (censoring) what was a major corporate business story nationally was very disappointing. But now? After the NYT story? The Oklahoman goes to work as an offshoot of the CHK PR department. There's so much 'Enron' written all over Chesapeake Energy. People want to deny and act like nothing is wrong. Look where that got Enron - and their investors.

So, exactly why is it so important that you publish any negative information or article about CHK? There's a clear trend here. Head in the sand? Over what? Unless you work there you've got no horse in the race so what does it matter? What is it that you are trying to achieve? CHK does an enormous amount of good in this city and employs thousands of people. CHK will have a hard enough time trying to remain independent as time goes on. As big as it is, if Exxon-Mobil or BP or someone decided they wanted to absorb CHK, they could do it easily. Then OK would ahve about a zillion square feet of really nice EMPTY office space up on western.

Why does it matter to me? The last part of your post says it all. It's not time to turn a blind eye to all the problems of corporate (mis)governance at CHK.
It is very important that CHK succeed for the future of Oklahoma City. Right now, the padding of wealth of Mr. Aubrey McClendon is job #1 at CHK.
I agree with many, many analysts who believe AM should be gone - before he's forced to go and ruins CHK (and a good chunk of OKC) in the process.
Greed is an old story. On what planet are BILLIONS not enough, Aubrey?

[Snowman]

Why you are expecting some groundswell of investors action for this. Even giving you every points you make the company has higher percent returns on investment over the last twenty years than most stocks. Plus outside of start-ups, forced changes in CEOs most of the time do not increase shareholder value until many years out (assuming the new CEO can show a dramatic improvement) and most of the time leads to something between no improvement but more often years of lost value, with the exception of when their are far more people than currently would want him out than words in the annual report. Do you have someone in mind that will assure investors that they will do a better job?

[MikeOKC]

Why you are expecting some groundswell of investors action for this. Even giving you every points you make the company has higher percent returns on investment over the last twenty years than most stocks. Plus outside of start-ups, forced changes in CEOs most of the time do not increase shareholder value until many years out (assuming the new CEO can show a dramatic improvement) and most of the time leads to something between no improvement but more often years of lost value, with the exception of when their are far more people than currently would want him out than words in the annual report. Do you have someone in mind that will assure investors that they will do a better job?

No, I just know the current CEO is good with start-ups and running a private business, but is running the public CHK like it's still his private business and is endangering Chesapeake Energy Corp. He simply is too much of a corporate cowboy to run a public company. This truly is not personal - I'm simply outraged at what AM gets away with and I know the time will come when I will say, "I told you so." We'll see, huh?