SEC Investigating Chesapeake Energy CEO Well Perk
Chesapeake Energy Corp. said Friday that the U.S. Securities and Exchange Commission is investigating a perk awarded to departing Chief Executive Aubrey McClendon.
The SEC notified Chesapeake in December that it was stepping up an informal inquiry into Mr. McClendon's ability to invest in wells that the company drills, the company disclosed in a regulatory filing. The agency has issued subpoenas for information and testimony to Chesapeake, the country's second-largest natural-gas producer.
The disclosure by the Oklahoma City-based company comes weeks after its board cleared Mr. McClendon of "intentional misconduct" in a months-long internal probe of his financial relationships with investors in the company. In January, the Oklahoma City-based company said that Mr. McClendon would retire by April 1, a move it said was not related to the probe.
Chesapeake grants Mr. McClendon the option to acquire small stakes in every well that it drills--more than 1,000 last year --as long as he pays his share of the cost. To pay for this, Mr. McClendon has taken out personal loans for hundreds of millions of dollars from companies that invest in Chesapeake, a revelation that sparked shareholder ire last year.
The company and Mr. McClendon agreed to end the perk in June 2014.
Chesapeake faces shareholder lawsuits over the perk in addition to the SEC investigation. It said Friday that the lawsuits and governmental inquiries increased its legal expenses in 2012 from the previous year.
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