Chesapeake Energy CEO Aubrey McClendon will no longer be allowed to take a personal stake in company wells.
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- Deon Daugherty
- Reporter - Houston Business Journal
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Controversial borrowing practices by Chesapeake Energy?s CEO Aubrey McClendon is raising additional scrutiny by the Securities and Exchange Commission?
McClendon has current loans of $846 million, which finances his participation in a compensation package that allows him to invest with Oklahoma City-based Chesapeake in all drilling endeavors to share both expense and profit. Historic lows on natural gas prices are undercutting value of both his and the company?s investments.
The SEC has launched an informal investigation into McClendon?s finances, and some analysts are calling for additional action, according to the Times.
Standard & Poor's?
The Times noted that many gas explorers have sustained low fuel prices, but Chesapeake has been especially criticized as word spread of McClendon?s unique borrowing approach and the board?s unwillingness to stop it. Shareholder disapproval reached a pitch in recent days when Reuters reported that McClendon has used his personal stake in Chesapeake to guarantee up to $1.1 billion in loans to fund his investment costs in Chesapeake wells.
The company has said it wouldn?t be responsible for McClendon?s loans and denied any conflict of interests.
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Deon covers energy and law for the Houston Business Journal.
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