The Motley Fool's Fourth-Worst CEO of the Year Is...

It's that time of the year again, folks! It's time to dust off the cyber awards and crown five CEOs with the dubious honor of being the worst of the worst in 2013.

Unlike last year, when we held several rounds of public voting after I arbitrarily picked eight of the best and worst CEOs, I wanted to do something different this year. So instead of randomly picking who I thought should be in each category for 2013, I reached out to as many of my Motley Fool colleagues as possible and aggregated their answers into one list. The result is a considerably more balanced list representing a wider swath of views and likely a more accurate portrayal of the worst CEOs of the year than I could have come up with by myself.

Last week, I unveiled the fifth-worst CEO of the year award, which went to Thorsten Heins, the now-former CEO of struggling mobile device maker BlackBerry.

This week, we'll continue our theme of highlighting leaders who have been relieved of their duties this year by introducing the consensus fourth-worst CEO of the year, Aubrey McClendon, the now-former CEO of Chesapeake Energy (NYSE: CHK  ) .

Why Aubrey McClendon?
Perhaps the appropriate question here should be "Why anyone else?" as fellow Fool Maxx Chatsko's top three worst CEOs of the year were (1) Aubrey McClendon, (2) Aubrey McClendon, and (3) Aubrey McClendon!

This was actually the second year in a row that McClendon has received this dubious honor, with the Foolish community voting him as the runner-up for worst CEO of the year in 2012. Much of the same shortcomings that drew the ire of shareholders last year served as the reasoning for why he made the list yet again.

Source: Wikimedia Commons.

First and foremost on that list was McClendon's questionable corporate governance. Last year, we discovered via a Reuters report that McClendon had borrowed $1.1 billion from three third-party institutions -- one of them being EIG Global Energy Partners, which had been a financier for Chesapeake Energy. By securing personal loans from a business associate, McClendon exposed himself to a potential conflict of interest that could have resulted in EIG's interests being favored instead of Chesapeake shareholders'. 

McClendon's buying spree was another point of contention that ultimately hurt shareholder value and certainly irked my Foolish energy colleague Matt DiLallo, who listed McClendon among this year's worst CEOs for his overspending habits. McClendon's large asset purchases, which centered around buying up natural gas assets over the past decade, left Chesapeake in a bind last year when natural gas prices tumbled.

Ultimately, Chesapeake was required to sell a substantial amount of its assets to cover its 2013 capital expenditures. These sales included a $4 billion midstream interest sold to Global Infrastructure Partners, a $3.3 billion sale of assets in the oil-rich Permian Basin, which Chevron (NYSE: CVX  ) and Royal Dutch Shell (NYSE: RDS-A  ) certainly got on the cheap, and more recently a sale of Southern Texas and Northern Louisiana oil-rich assets to Exco Resources (NYSE: XCO  ) for $1 billion -- also a great deal for Exco. Although Chesapeake won't need to take on any additional debt this year to cover its capital expenditures, it was forced to give up some very lucrative oil-bearing assets to make up its shortfall in free cash in 2013.

Third, and perhaps the one factor that gets most under shareholders' skin, was McClendon's exorbitant compensation package. According to Forbes' totals, which it released in April 2012, McClendon had accumulated $303.6 million in compensation over the previous five years. Chesapeake's share price, however, was down slightly!

To add insult to injury, when McClendon's departure was announced earlier this year, we discovered that it was being treated as a termination without cause rather than a retirement. Why? Because if McClendon had retired, he would have owed Chesapeake $11.25 million based on a $75 million bonus received in 2008 according to NewsOK. Instead, McClendon's termination without cause allowed him to walk away with approximately $47 million in severance pay, benefits, and accelerated equity compensation.

Finally, it was a simple case of share-price underperformance with McClendon at the helm. Since 2005, Chesapeake's share price hasn't really gone anywhere despite the S&P 500 advancing about 50% over that time span. That sort of underperformance is rarely tolerated by shareholders.

Stay tuned as we unveil our third-worst CEO and our third-best CEO of the year next week.

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