Monday, March 30

McLendon Facing Legal Mumbo-Gumbo

Gretchen Morgenson of the New York Times reports that former Sonic owner Aubrey McClendon is facing an inquiry in the state of Oklahoma after a shareholder of Chesapeake Energy demanded tighter scrutiny of a huge bonus McClendon received in the tail-end of 2008.

As Morenson reports, McClendon was awarded $75 million by Chesapeake and a new contract in December 2008, after his old contract (a five-year deal signed in 2007), was viewed as out of date (translation - because Chesapeake's stock had dropped so precipitously, it was no longer financially viable for the soon-to-be-broke McClendon).

Anyhow, the board of directors deemed CHK's $33 billion drop in value from July to December to be meritorious of a $75 million reward to Aubrey. The shareholders, Louisiana Municipal Police Employee Retirement System, which saw their 85,000 shares drop in value from more than $6 million to less than $2 million, didn't think so.

And so, rather than file a lawsuit, the group decided to file a "books and records demand" in the State of Oklahoma. Will this filing force McClendon to return the $75 million and tear up his new contract? Unlikely. Will this filing force Chesapeake to go through a few months of uncomfortable headlines, require the conniving McClendon to fess up to poor management, and create some unsettling feelings for the board of directors? You bet.

Couldn't happen to a nicer bunch of guys.

28 comments:

Anonymous said...

I hear ACORN's going to picket his home any day now! Nothing like class warefare! I'm sure Gates, Ballmer, Bezos and other fat cat seattle ceo's never got a bonus!

Hacksaw said...

Interesting comment, Anonymous, and class warfare does suck (vote Libertarian!!) but . . . . really?

Gates has donated tens of billions of dollars to charity, and Bezos takes an annual salary of $82K while running one of the few companies that didn't tank during the current recession.

At least pick some good examples if you're gonna get all flustered.

Anonymous said...

McClendon's lack of competence along with general counsel Henry Hood will lead to CHK demise. These guys are corporate thugs and crooks. Look at how many lawsuits have been filed against them. If you ever do business with them or own CHK stocks you better have a damn good lawyer.

Anonymous said...

Speaking of picketing.. I hear a Texas chapter of the NAACP plans to picket their corporate office in Fort Worth, Texas.

Anonymous said...

hmmm.....maybe if bezos was more greedy he would have been in a position to buy the sonics. If Gates is so charitable, then why didn't he step up and buy them when they went up for sale? At least Ballmer tried, but to late.

ryan said...

Yeah, that bastard Gates, wasting his money for buying mosquito nets for Africans instead of for buying basketball teams ... guy's sure got his priorities screwed up, huh?

As for the bonus thing, in what scenario does McClendon NOT deserve a bonus, at least by the protocol set up by CHK? I mean, for crying out loud, the company's stock took a total nosedive, he had to unload all of his shares, there are rumors every day that BP is going to buy them ... and he gets to rip up his old contract AND a $75 million bonus? What do they give him if he actually produces - gold plated underwear?

Anonymous said...

Not one billionaire in Seattle would step to keep the Sonics! Shultz sells them, and the others could care less. I'm pretty sure McClendon’s philanthropy is nothing to scoff at too - boohoo losers.......

chunkstyle23 said...

Ryan, I share your confusion. I also was unaware that the 2.0 definitions of "success," "philanthropy" and being "winners" are, respectively, "driving companies into the ground," "buying pro basketball teams," and "moral victories." Thanks for schooling us, Anonymous 1/5/7.

JAS said...

Hey, Chunkstyle, don't sell Aubrey short. "Philanthropy" in his case also means "financing political smear campaigns."

JAS said...

"don't sell Aubrey short..."

Pun not intended.

Anonymous said...

I just found this blog yesterday too. Odd that it's a pro Sonics board that likes to trash the people who purchased and moved them. But you got to wonder why no one in Seattle with money and in the political realm would've come to the rescue? Seems the wrong people are being criticized. At the very least the NBA would not have let them leave if an arena had been built – no matter who the owners were.

nuss said...

If by "no one in Seattle with money," you mean Steve Ballmer, the CEO of Costco, and a founder of a massive telcommunications company, then, yes, you're right, no one in Seattle was willing to buy the team. As for the "arena being built," the plan Bennett proposed cost $500 million, and he offered to contribute exactly $0. It was a complete con, and anyone analyzing the story for more than 5 minutes would realize that.

Put it this way - David Stern has publicly endorsed the ownership committee and the arena plan they would like to implement. The reason the team is in OKC right now is not because Seattle failed to step up, it is because the NBA wished to preserve the threat of relocation to the other half-dozen franchises currently on the brink of disaster.

Anonymous said...

Just admit folks Seattle overall failed and lost. Not the fault of the fans. So get on with life.

chunkstyle23 said...

Oh, you mean, "move on with life," like "antagonize the aggrieved party on their own website?"

anonymous #12 said...

Ballmer was willing to buy the team... long after it was no longer for sale.

Just an itsy bitsy detail you left out there, Nuss.

Anonymous was also right about a new arena keeping the team here. It didn't have to be Bennett's plan. Any plan for a new arena would've worked. There were no other new arena plans. None.

chunks brother said...

there wasn't any other deal? what about the refusal to agree to a renovation of the Key? Then, after the move, the NBA all of the sudden says it'll work? Hmmmm, I smell conspiracy...our gov't didn't do enough but don't act as though we didn't get shafted. Another thing, we lose our team, and you get to rub it in our faces. Stay classy!

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