Is This Man the World's Worst CEO -- or Just the Greediest?

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Aubrey McClendonYou've got to hand it to Chesapeake Energy's (CHK) CEO. Whatever else you say about the man, Aubrey McClendon is no slave to public opinion. He does what he wants, no matter how sleazy it sounds, no matter what other people think about it -- and no matter how much money it costs him ... or his company's shareholders.

The latest big news is the transaction McClendon engaged in to try to grab for himself a bigger slice of his company's profits. You see, Chesapeake gives its CEO the right to buy a 2.5% interest in the gas and oil wells the company owns. Oil wells don't come cheap, though, so to take advantage of the offer, McClendon borrowed big -- as much as $1.1 billion, according to reports -- and pledged his ownership interests in the wells as collateral.

Let's be crystal-clear about what's happening here: The man who runs Chesapeake, who determines how many wells Chesapeake will drill, is borrowing money and using it to invest in these wells -- personally, for his own account and not for any benefit of his company's shareholders.

McClendon says this is all kosher, that there's no conflict of interest involved. But in fact, there is.

As the boss at Chesapeake, McClendon has the power to decide whether wells will be drilled, and how many wells to drill. He's done a lot of drilling, by the way, and put Chesapeake in hock to the tune of $10.5 billion to do it. If he hadn't run the company into so much debt, of course, there would be fewer wells for him to invest in personally.

Is that a conflict? Sure smells like it.


This is not the first time that McClendon has mixed business with, well, personal business. In 2008, McClendon gambled big on the chance that his company's bets in natural gas would pay off. He took out margin loans from his brokers to fund the purchase of millions of shares of Chesapeake stock. When the stock market tanked, though, and the value of those shares fell, he was forced to liquidate about 90% of his entire stake to cover his losses -- accelerating the downward trajectory of Chesapeake shares for him and everyone else who invested in the company. This mistake cost McClendon a reported $2 billion in stock losses.

As for his shareholders, after a peak-to-trough loss of nearly 75% in share price, McClendon's shenanigans have cost shareholders $31 billion in market cap ... and counting.



Motley Fool contributor Rich Smith holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy.

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210 Comments

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jay917

Bet he's a Romney contributor

April 28 2012 at 9:47 PM Report abuse +1 rate up rate down Reply
1 reply to jay917's comment
pooleconsulting

Well, you had your say,,now back it up with facts...

April 29 2012 at 12:05 PM Report abuse -1 rate up rate down Reply
MiserblOF

It just gives the lie to the ridiculous concept that companies are run for the good of the stockholders, the supposed "owners" of the companies. Stockholders are being played for suckers, and have more in common with the viciously exploited workers than most stockholders would care to admit. The corporate thugs that run the companies don't give a hoot what the stockholders or the workers have to endure - it's all about taking care of their unbounded greed.

April 26 2012 at 7:01 PM Report abuse +1 rate up rate down Reply
smart8001

The worst CEO is that b---h who fired the woman who had donated a kidney. If I lived in the town where that busines is located, I'd hire round-the-=clock picketers and ask for a boycott of their products and services. She is just a lousy human being

April 26 2012 at 5:34 PM Report abuse +3 rate up rate down Reply
Buckingham's

You can't take it with you when you die, charlie.

April 26 2012 at 4:36 PM Report abuse +2 rate up rate down Reply
billybuttlooker

Greediest he is a republican

April 26 2012 at 3:59 PM Report abuse -2 rate up rate down Reply
stg2797

What amazes me is that these low lifes keep on getting away with it. But you try it and you'll be locked up so fast you won't know what hit you.

April 26 2012 at 3:48 PM Report abuse +1 rate up rate down Reply
TexasKitty

Worst CEO? Must be related to Obama!

April 26 2012 at 2:50 PM Report abuse -2 rate up rate down Reply
3 replies to TexasKitty's comment
Setanta

sorry to slap this up here
but DUE TO huffingho's CENSORSHIP it can't and WON'T GET BY-
ONCE AGAIN as in over and over,arriannuh starts the anticatholic show,
and ONCE AGAIN I strongly urge all and any remaining aol paid subscribers to evaluate exactly WHAT
they are SUPPORTING.
AOL has always been left / lib leaning and with the addition of huffpoo,huffingpoo's censorship called "moderation" has now exceeded the limit.
of course it IS their blogs,boards,WEBSITE and for many their ISP,
but WHY PAY THEM to promote o'bummer,trash established religious beliefs and practices and ABUSE their "right" to ""moderate"" the conversation ?
cut them loose.
NEVER FORGET--those that CONTROL THE VOCABULARY,CONTROL THE ARGUMENT.

April 26 2012 at 11:11 AM Report abuse rate up rate down Reply
2 replies to Setanta's comment
Greg Marchione

I agree completely. I don't like Fox news either but Huff Po is even worse only their slant is completely left.

April 26 2012 at 1:51 PM Report abuse -1 rate up rate down Reply
Seewcrazy

They are vocabulary nazis. What can I say? Even some seemingly innocent everyday words are targeted and not just by the HuffnPuff bunch

April 26 2012 at 3:58 PM Report abuse rate up rate down Reply
johnfj

Hello . . . where is the Board of Directors? Go back to Enron -- remember the darling of the stock market until it wasn't -- and the CFO doing side deals with the corporation to the detriment of the corporation and the shareholders. The CEO should not be "distracted" by "side bets" on some of the company's operations. Period. This has all the potential of a titanic disaster and the DOB should wake-up before the iceberg.

April 26 2012 at 10:17 AM Report abuse rate up rate down Reply
coinguy804

SELL YOUR WORTHLESS STOCK NOW before he figures out a way to CHARGE you

April 26 2012 at 7:54 AM Report abuse rate up rate down Reply
1 reply to coinguy804's comment
billybuttlooker

LOST A BUNCH UNDER BUSH MADE IT AL BACK UNDER OBAMA

April 26 2012 at 4:01 PM Report abuse -1 rate up rate down Reply