Expand Energy (Formerly Chesapeake)

[MikeOKC]

How did this get missed? I haven't seen anything on the forum. Not to mention, The Oklahoman found it unworthy of news. And here we are just 48 hours before the annual meeting.

ISS advises against McClendon for board

Influential proxy advisory firm ISS has recommended Chesapeake Energy shareholders oppose chief executive Aubrey McClendon's re-nomination to the board of directors.

The group cited an unresponsiveness on McClendon’s part to investors and compensation issues, Reuters reported.

ISS also urges shareholders to vote against the reelection of former US Senator Don Nickles, who is chairman of the governance committee of the US natural gas company.

"A pay-for-performance disconnect has been identified at this company," ISS said in a 16 May report. "The company does not use any performance-linked incentive, choosing to rely instead on the discretion of the compensation committee."

Chief executive Aubrey McClendon's pay rose 13.4% last year, while one-year total shareholder return was only 1.4%, below the peer median of 35%, ISS said.

McClendon also receives excessive perks, the proxy advisory firm wrote.

ISS also recommended holders opposed the company's executive compensation plan, the filing said.

In a letter to shareholders, Chesapeake wrote that ISS's reliance on short-term stock performance should instead be focused on the long term.

The company also told investors that its board takes feedback from corporate governance specialists and big shareholders, factors that ISS did not take into account.

-------------------------

He's treated like a God here in Oklahoma City, but McClendon deserves the boot from the board. And he's not the only one, that board is loaded with McClendon lackeys. His compensation package is so far askew from reality that it should be derided by all that care about the future of CHK. The big question - will stockholders or the SEC bring down Aubrey McClendon first? CHK is rogue and out of control.

http://www.upstreamonline.com/live/article258872.ece

[MikeOKC]

CHKand McClendon still out of control. ISS says McClendon & Nickles should get the boot from the Board of Directors. Thread here.

Edit: At the thread linked above is another link to an MSNBC story today from the Motley. "It's Even Worse Than You Think At Chesapeake Energy"

[Midtowner]

With McClendon out, how long before CHK merges with someone or relocates to Houston?

[MikeOKC]

I think the question should be turned around:

With McClendon still running the show, how long before CHK becomes a prime takeover target and relocates to Houston?

Remember, ISS just says he should be kicked off the board - he's still CEO. However, I think he's a disaster waiting to happen for Oklahoma City.


(........waiting for Brent Gooden & his "PR" firm to enter the thread and "correct" the record.)

[MikeOKC]

And the piling on begins (and rightfully so).....

MSNBC (today) from Motley's Matt Koppenheffer:

"It's Worse Than You Think At Chesapeake Energy"

The governance practices at Chesapeake Energy with regards to its CEO are a complete joke.

"Keep pulling the sweater ... Eventually the thing will unravel."
-- Zoolander

That odd quote from Ben Stiller's classic comedy has been stuck in my head ever since I published a story on the compensation for Chesapeake Energy's Aubrey McClendon.

I got plenty of good feedback on the story, and a number of folks who shared the view of McClendon as the consummate big-spending gambler. I also heard a couple of times that the extent to which McClendon gets rich from Chesapeake only begins with the compensation package that I focused on previously.

The rest of the story:

http://www.msnbc.msn.com/id/43325721...s-motley_fool/

[BoulderSooner]

CHK and McClendon are both great and getting better every day .... did/do you read the annual report? ... ISS is a joke ... clearly you have something personal against AM and or CHK

[MikeOKC]

CHK and McClendon are both great and getting better every day .... did/do you read the annual report? ... ISS is a joke ... clearly you have something personal against AM and or CHK

Riigghhhhtttt. That's it. Kill the messenger. Make it about ME. Is your head in the sand?

[okcpulse]

I find it rather humorous that anytime anyone ever worries about any company in Oklahoma, their default twitch is "looks like they are relocating to Houston." If Aubrey gets the boot, maybe they will, or maybe they won't. Oklahoma City is a completely different environment today than it was during the energy exodus to Texas in the 1980s. It's even different when Kerr McGee was dissolved, but that company had dried up long before Anadarko swallowed them up. The city is much more appealing to companies when considering the QOL factor, so the chance is greater they will want to stay.

Now, if CHK DOES become a take-over target by a Texas company... well, let's just put it this way: Texans only care about Texans.

[MikeOKC]

Here's the original story (from last week) that, after closer inspection, prompted Koppenheffer to write the follow-up (in the MSNBC link above).
"Is This Company's CEO Worth It: Chesapeake Energy"
http://www.fool.com/investing/genera...ke-energy.aspx

[redrunner]

Yikes...Trouble in paradise?

[BG918]

I find it rather humorous that anytime anyone ever worries about any company in Oklahoma, their default twitch is "looks like they are relocating to Houston." If Aubrey gets the boot, maybe they will, or maybe they won't. Oklahoma City is a completely different environment today than it was during the energy exodus to Texas in the 1980s. It's even different when Kerr McGee was dissolved, but that company had dried up long before Anadarko swallowed them up. The city is much more appealing to companies when considering the QOL factor, so the chance is greater they will want to stay.

Now, if CHK DOES become a take-over target by a Texas company... well, let's just put it this way: Texans only care about Texans.

The only companies I could see buying Chesapeake would be Exxon, ConocoPhillips, and Encana.

[bluedogok]

The ISS's of the world are the reason why the financial sector is a complete mess, they are symptomatic of the typical short sightedness that the profit takers (they can no longer be called investors) focus on. It is pretty dang simple, if someone feels that CHK is a bad investment, don't put your money in there and eventually the stock prices will reflect that many people do but evidently most don't. All upper level management types get a ridiculous payday anymore, it isn't just McClendon or energy sector honchos, the worst of the worst are the financial sector upper management who keep granting themselves lavish packages when they lose billions.

[okcpulse]

Well, see here's the problem. Before the Devon Tower began construction, someone came on here claiming that Devon might be up for sale and there would be no tower. Yyyyeah. Then, people speculated that the Devon Tower would be scaled back like the OneOK Tower was in Tulsa after oil prices dropped. Last time I checked, the forms are coming together for floor 47. For every piece of good news about OKC we celebrate, there is always a group of people that say "well, that's great, but..."

So when is enough going to be enough? I am not saying MikeOKC is wrong or right, but we seem to hit these 'The sky might be falling, pack for Texas' conversations every year like clock work. Am I the only one that sees a problem here?

[onthestrip]

The thing is is that we aren't really the ones saying this. These concerns are coming from national writers and industry experts. One thing that I don't think anyone can disagree with is his $75 mil salary a couple years ago when the stock price tanked. That is complete recklessness.

[MikeOKC]

So when is enough going to be enough? I am not saying MikeOKC is wrong or right, but we seem to hit these 'The sky might be falling, pack for Texas' conversations every year like clock work. Am I the only one that sees a problem here?

Per the the Texas bit.... I was responding to Midtowner more in jest than anything. That's not the issue. The issue is the continued rogue behavior of CHK.

[MikeOKC]

The ISS's of the world are the reason why the financial sector is a complete mess, they are symptomatic of the typical short sightedness that the profit takers (they can no longer be called investors) focus on. It is pretty dang simple, if someone feels that CHK is a bad investment, don't put your money in there and eventually the stock prices will reflect that many people do but evidently most don't. All upper level management types get a ridiculous payday anymore, it isn't just McClendon or energy sector honchos, the worst of the worst are the financial sector upper management who keep granting themselves lavish packages when they lose billions.

I think the major point from analysts is that CHK was raked over the coals on the now infamous AM compensation package and all the board has done to correct it is - nothing. Did you read those articles? It's clear that very many people believe AM is still running CHK like it's a private company and has a board that's doing his personal bidding for compensation-stacking that is unacceptable at a public company. It's obviously very carefully skirting the law. Yes, you are right, there are a lot of ridiculous pay packages out there. But they aren't the issue. CHK and Aubrey McClendon are being singled out for a reason. "Horrible corporate governance" in the words of one. Having board directors making $577,000.00 a year is rightfully called "scandalous" for a reason. They're not going to buck you when you're on the board and controlling things like it's a private company and paying them those ludicrous pay days for - literally - a few days of work. I think CHK stockholders better listen. When that one writer quoted Zoolander, I'm afraid he's pretty damn close: "Keep pulling the sweater ... Eventually the thing will unravel." And frankly, Oklahoma City cannot afford problems at CHK with corporate cowboys putting not only CHK, but our city, at risk.

[Snowman]

The thing is is that we aren't really the ones saying this. These concerns are coming from national writers and industry experts. One thing that I don't think anyone can disagree with is his $75 mil salary a couple years ago when the stock price tanked. That is complete recklessness.

Many 'national writers' analysis is totally/nearly useless, that is why their day job is writing about stocks not trading them.

[MikeOKC]

Today - it's the Wall Street Journal

Chesapeake CEO Faces Storm

"Chesapeake Energy Corp., facing calls from an influential advisory firm to oust co-founder and Chief Executive Aubrey McClendon as chairman over executive pay issues, gave ground hours before its annual meeting.

Mr. McClendon has proved a controversial figure, at once admired for building the nation's second-largest natural-gas producer from scratch, but also criticized for appearing to flout normal standards of corporate governance regarding compensation. Unlike many executives in the country, Mr. McClendon's compensation is set solely at the nine-member board's discretion and hasn't been tied to stated performance standards.

Hours ahead of the annual meeting, Chesapeake on Thursday filed a statement with the U.S. Securities and Exchange Commission committing to implement an "executive compensation system that includes objective performance criteria," as recommended by an independent compensation consultant the company engaged in March. The company had eschewed tying compensation to such objective metrics as recently as April, according to regulatory filings."

~

"Mr. McClendon has made more than $152 million in cash, stock and perquisites since 2008, according to federal filings, making him one of the nation's highest-paid chief executives in any industry."

~

"Directors' pay for 2010 averaged above half a million dollars, including their personal use of corporate aircraft."

http://online.wsj.com/article/SB1000...181597036.html

A McClendon apologist is also quoted - there's few of them. Many of my friends here at OKCTalk don't realize this man's hubris has made him the poster boy for all that's wrong with corporate governance.

[MikeOKC]

Today - it's the Wall Street Journal. "
"Chesapeake CEO Faces Storm"
http://www.okctalk.com/showthread.ph...389#post437389

Yes, Aubrey, we keep telling you it's a public company now!

[onthestrip]

Many 'national writers' analysis is totally/nearly useless, that is why their day job is writing about stocks not trading them.

Well now its just another writer, from the nobody newspaper Wall Street Journal. They probably dont know anything either.

Chesapeake may very well be fine and go on to do great things and make shareholders happy but it doesnt have to take any national writer to realize that Aubrey has stocked the board with yes-men that do whatever he wants them to do. Hard for board members to say no when they are getting the compensation he gives them

[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....