Photo: The Lost Ogle
Chesapeake, the big energy company whose CEO is under fire, happened to have its quarterly conference call today.For some background, CEO Aubrey McClendon has been getting raked over the coals over the last couple of weeks due to revelations that he has invested heavily with his own money in the company wells—a situation that potentially puts him in a conflict of interest with shareholder interests.
But it gets worse!
Today it was reported that McClendon has basically been running his own commodities hedge fund on the side. That hedge fund deals in the same commodities that Chesapeake deals in, and again, would seem to create obvious avenues for conflicts of interest, if the interests of Chesapeake are somehow in conflict with the fund.
So what did sell-side analysts ask on the company conference call?
With the exception of a technical question regarding the Chesapeake board’s decision to wind down the controversial Founder Well Participation Program, which was giving CEO Aubrey McClendon a personal stake in 2.5 per cent of all the company’s wells, the issue of McClendon’s hedge fund transactions, revealed this morning by Reuters, and his mortgaging of well assets, reported in March by the Pittsburgh Post-Gazette, was completely avoided.
Let that sink in: This is the #1 most important topic for shareholders right now (whether the CEO can even survive) and Wall Street didn’t even bother to ask about it. Lame.
McClendon did acknowledge in his opening remarks he was “deeply sorry” about the turmoil the revelations have caused and pointed to the “enhanced disclosures” the company has issued about his transactions.
Meanwhile, Chesapeake shares were down up to -14 per cent this morning.
SEE MORE: The Fabulous Life of Aubrey McClendon
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