There have been a number of calls in recent days for Chesapeake Energy (NYSE: CHK) CEO Aubrey McClendon to resign in the wake of two highly questionable schemes.
The first, revealed two weeks ago, is that McClendon took roughly$1.1 billion in personal loans against his stake in Chesapeake wells.
If that wasn’t enough to shake confidence, Reuters reported yesterday (Wednesday) McClendon ran a lucrative business on the side.
But not just any side business. McClendon was running a $200 million hedge fund that traded in the same commodities Chesapeake produces.
This is a serious conflict of interest to say the least, because one has to ask just whom McClendon was looking out for at all times: his shareholders or himself?
The answer should be easy to discern.
The reactions have included calls for more responsibility to shareholders.
“An executive’s first responsibility is to shareholders and the betterment of their investment,” said Carl Holland, who ran the trading-compliance department at former U.S. oil major Texaco. “Personal trading in the commodity around which the CEO’s business is based would be a clear no. We would never have tolerated that, ever.”
There have also been brutal rants by private investors slamming the fact that McClendon recently hired PR spin doctor George Sard, who has represented a number of fallen, humiliated high-profile clients. They include the Madoff brothers, Eliot Spitzer, former Lehman Brothers CEO Dick Fuld, and executives at Enron and Fannie and Freddie Mac.