Story To Watch - Part II - Chesapeake CEO

I have always believed that in the world of alternative investments, oil and gas sponsors tend to get away with internal deals that would not be allowed in other asset classes.  The compensation perks of Chesapeake Energy's CEO, Aubrey McClendon, reinforce my opinion, even though Chesapeake does not sponsor retail oil and gas programs.  McClendon received stakes in Chesapeake's wells and borrowed $1.1 billion against these interests.   The conflicts of these arrangements are detailed in two articles here and here. 

The second article describes how one of McClendon's creditors was a former Chesapeake board member.  This paragraph sums up the relationship:

In June 1998, documents filed in Oklahoma County court show, McClendon had a financial relationship with Whittemore, a veteran Wall Street executive who served on Chesapeake's board from 1993 until 2011. For all eighteen years on Chesapeake's board and at the time of the loan, Whittemore served on Chesapeake's compensation committee. In that capacity, he helped determine how - and how much - McClendon would be paid. He also served as a member of the corporate governance and audit committees.

Chesapeake's board is distancing itself from McClendon.  Another one of McClendon's creditors is EIG Global Energy Partners, which also has provided financing to Chesapeake.  Interesting.  I still believe this story is worth watching. 

Update:  This morning, Chesapeake stripped Aubrey McClendon of his Chairman of the Board duties.  He will be replaced by and independent chairman but will remain CEO.