It turns out that it’s not only AIG board members who are going around and handing out giant bonuses to themselves after nearly killing their company. It seems the hottest new trend in America has worked its way into the ownership realm of the NBA.
Aubrey McClendon is one of four men who own the Oklahoma City Thunder — he’s the one who the NBA fined $250K after stating his desire to move the Seattle Sonics to OKC – and he’s also the CEO, chairman, and co-founder of Chesapeake Energy. In October of 2008, McClendon sold his shares of Chesapeake just before the company’s stock completely collapsed, and lost $1.92 billion in the process. That’s a lot of money to lose, so it’s not exactly surprising that he gave himself a $75 million bonus to help offset it.
From SUPERSONICSOUL.COM:
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Chesapeake and a new contract in December 2008, after his old contract (a five-year deal signed in 2007), was viewed as out of date (translation - because Chesapeake’s stock had dropped so precipitously, it was no longer financially viable for the soon-to-be-broke McClendon).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.
So those shareholders then filed something called a “books and records demand” in Oklahoma to have it looked into. As SUPERSONIC SOUL points out, however, it’s doubtful that McLendon is going to have to give back any of the bonus, but rather just have to deal with some uncomfortable headlines for a while.
All I know is that if I’m a Thunder season ticket holder, I’d fully expect the price of those tickets to go up next season even if the team barely manages to win 20 games this season. McClendon’s still got about $1.17 billion to make up.
10:05 am on March 31st, 2009
wow, big bonus, but with a reason.
10:28 am on March 31st, 2009
You got some facts wrong. McClendon didn't voluntarily sell his stock; he lost about 94% of it because of margin calls. Also, this isn't a cash bonus. It's a credit against future costs he'll incur participating in wells with Chesapeake. This bonus still seems excessive for a CEO whose company's stock plummeted in value. But the real story is interesting enough. You don't have to omit facts to make it better.
11:13 am on March 31st, 2009
Vito makes a good point. Brooks, McClendon had massive margin calls when his stock fell from the mid 70s into the 20s, he was the largest single stock holder in CHK showing his support for his own company (which few do). He was a forced seller due to these calls, a lot different that proclaiming 'sold his shares right before the stock collapsed'
12:02 pm on March 31st, 2009
Can't wait until the Ford Center — even with the 'remodel' — is obsolete. I may not have to wait that long…
4:27 pm on March 31st, 2009
May I be the first Sonics fan to wish Mr. McClendon to burn in hell after rotting in prison… after Obama outlaws being a douche.