Chesapeake Ending Controversial Loan Program
Chesapeake Energy says it’s ending a program that allowed CEO Aubrey McClendon to borrow more than $1 billion against the company’s natural gas wells.
Chesapeake operates nearly 200 producing wells in Pennsylvania.
The Post-Gazette, who was first to report on Chesapeake’s loan program, has the details:
The program, called the Founders Well Participation Program, had afforded Chesapeake chief executive officer Aubrey McClendon a 2.5 percent stake in each well his company drills. The program has allowed Mr. McClendon’s compensation to skyrocket to the highest of nearly any CEO across any industry, but came under scrutiny in recent weeks when it was reporting he was taking loans and mortgages out against those personal stakes.
The existence of the loans — first reported by the Pittsburgh Post-Gazette — drew the ire of shareholders who said the borrowings weren’t explicitly disclosed.
Analysts in recent weeks have called for Mr. McClendon’s resignation, at least five shareholder lawsuits have been filed and company stock has fallen and taken more than $1 billion in market value with it.