To say that 2012 has been a year Chesapeake Energy (NYSE: CHK) shareholders would like to forget is a vast understatement. For those just catching up, let's review:

  • Natural gas -- which accounted for more than half of the company's revenue in 2011 -- hit multiyear lows due to supply gluts.
  • The stock's price is down more than 22% year to date.
  • It was reported that CEO Aubrey McClendon was leveraged to the hilt to participate in a company perk that put his interests at odds with shareholders'.
  • McClendon and SandRidge Energy (NYSE: SD) CEO Tom Ward ran a hedge fund when Ward still worked at Chesapeake that took up a great deal of their time and energy. The fund's existence raised questions of trading on insider information.

Today, a special report released by Reuters -- "The Lavish and Leveraged Life of Aubrey McClendon" -- is adding even more fuel to the fire.

A few details
The report, which Reuters put together after conducting several interviews and reviewing both public filings and internal documents, reveals just how over-the-top the company's chief executive can go.

First, there is AKM Operations, a small division of the company employing six full-time workers. Their main task: managing several business aspects of McClendon's personal life. Though regulatory filings make reference to the existence of such a group, its true scope was never made clear to shareholders. In 2010, this group worked over 15,000 hours and cost the company $3 million. It appears, however, that McClendon reimbursed the company for the bulk of the expenses.

Where that money is coming from, on the other hand, is another question. According to the report: "Although McClendon's net worth is pegged by Forbes at $1.1 billion, he has mortgaged much of what he owns: the restaurants, the wine, the boats, the homes, proceeds from three accounts at Goldman Sachs, his stake in private companies and his stake in thousands of Chesapeake wells."

McClendon owns a 19% stake in the Oklahoma City Thunder -- who qualified for the NBA finals just last night -- and even that holding isn't exempt from leverage. Twice he has taken out loans on future earnings from the Thunder -- loans which were previously undisclosed.

Just as damaging, McClendon has been using his clout to set up sweetheart deals for his personal businesses and friends. He owns an interest in several restaurants, some of which occupy land owned by Chesapeake subsidiaries. And the company plane has been used extensively for personal use -- including a trip to Bermuda in 2010 for nine female friends of Mrs. McClendon, but no family members on board.

Though such trips are legal under SEC rules and company policy, they seem to represent just one of several pieces of evidence pointing to a much larger problem at Chesapeake. The report nails the scope of the problem when it states, "Beyond the mixing of personal and professional, another theme emerges from interviews and records: McClendon's seemingly insatiable desire to own more and more -- of everything."

How did we get here?
When you are playing with your own money, you can pretty much do what you want and not too many questions will be asked. But once you're playing with other people's money -- whether it be taxpayers' or shareholders' -- there are different rules to play by.

You'd never guess from the company's behavior, though, that Chesapeake was a publicly held company. McClendon has been able to get away with his lavish and leveraged lifestyle because the officers who are supposed to be providing a check to his decisions largely consist of his friends. Only recently has the board decided to strip McClendon of his chairmanship and oust four directors, replacing them with four independent directors who can keep an eye out for abuses of shareholder interests.

In the end, McClendon's friends -- even the ones who acknowledge his odd behavior -- think the media is misreporting him as a man with a silver spoon who wants things the easy way. "The implication is that he pulled the lever on the slot machine in life and ding-ding, got lucky -- and nothing could be further from the truth," says Chesapeake senior vice president Thomas S Price, Jr. They cite a man who works long hours and cares deeply about his native Oklahoma.

While that may be true, McClendon's fatal flaw probably stems from a deeper problem relayed by Vanguard founder John Bogle in his book Enough.

The title comes from a conversation between Kurt Vonnegut and Joseph Heller -- author of the best-selling Catch-22. The pair is attending a party hosted by a multi-billionaire hedge fund manager. Midway through the party, Vonnegut points out that the host has likely made more money in one day than Heller ever made on his famous book.

"Yes," Heller responds, "but I've got something he'll never have: enough."

This, it seems, is a lesson McClendon sorely needs to learn.