February 20, 2013
Nearly a month after Chief Executive Officer Aubrey McClendon announced his intention to retire, on Wednesday, Chesapeake Energy (NYSE: CHK ) announced the results of its own investigation into certain financial relationships McClendon had entered into with the company. The upshot: Chesapeake absolved its boss of all wrongdoing.
The company's Audit Committee says that after reviewing "millions of pages of documents" and conducting "more than 50 interviews" with company and third-party employees, it has concluded that "financing arrangements between EIG Global Energy Partners and affiliates of Mr. McClendon regarding financing of his participation" in the company's "Founder Well Participation Program" contain no evidence of "intentional misconduct by Mr. McClendon or any of the company's management."
The Founder Well Participation Program -- revelation of which originally got McClendon in hot water with shareholders last year -- permitted the CEO to buy a 2.5% interest in gas and oil wells owned by Chesapeake, collecting profits personally from wells owned by the company he runs. McClendon reportedly had to borrow as much as $1.1 billion to pay for his ownership interests in these wells, and then pledged his stakes in the wells as security for the loans he took out.
According to the Audit Committee, though, all of this was completely above board. Neither McClendon's $1 billion-plus in loans, nor his personal interest in the company's assets, resulted in any "improper benefit to Mr. McClendon or increased cost to the company."