2012-06-07 12:57:55

For Chesapeake CEO, Business, Personal Interests Were Intertwined

Aubrey K. McClendon, the chief executive officer of Chesapeake Energy Corp, has intertwined his personal and financial interests with those of the publicly traded company he runs to a far greater degree than shareholders may realize, according to interviews, public records and hundreds of internal Chesapeake documents reviewed by Reuters.

The executive has deployed a team of Chesapeake employees to handle his personal business affairs and uses the corporate jet regularly to ferry family members and friends to holiday destinations, the internal records show.

McClendon's use of Chesapeake resources is so extensive that a special unit, informally known as "AKM Operations," is housed on the corporate campus and employs six full-time employees and the time of scores of others to carry out accounting and engineering services.

In 2010, Chesapeake employees spent more than 15,000 hours working on McClendon's personal projects at a cost of about $3 million, according to internal records reviewed by Reuters. In 2011, another document shows, Chesapeake workers did almost $3.2 million in work for McClendon. That document indicates McClendon reimbursed the company for all but $250,000 of this spending in each year, as required by his contract. In the past, AKM Operations tasks have included overseeing work to repair hailstone damage to a home McClendon owned.

The corporate flights are detailed in internal logs reviewed by Reuters. They show that McClendon took $2.25 million worth of business flights in 2010, and often brought family members along. This included trips valued at more than $100,000 to Europe and India that were billed as business flights.

McClendon also took a combined $1 million worth of personal flights in 2010 and 2011, a perk allowed under his 2008 employment contract. Flight logs show that this included frequent trips from Oklahoma City to Bermuda, where the McClendons own vacation properties. On one flight, nine friends of McClendon's wife took a Chesapeake-leased jet to Bermuda without any McClendons aboard.

Other records that show McClendon has leveraged his future profits in the Oklahoma City Thunder, the NBA team in which he owns a 19 percent stake. The team has a $36 million sponsorship deal with Chesapeake.

Chesapeake declined to comment, as did a spokesman for McClendon.

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