(Reuters) - In its latest employment contract with CEO Aubrey McClendon, Chesapeake Energy Corp gave him permission to trade commodities for himself after he already had begun doing so.
Giving the CEO explicit license to play the markets represented an extraordinary incentive that enhanced one of corporate America's most generous compensation plans and reinforced the unique treatment afforded to McClendon by Chesapeake.
Oil and gas producers say they typically prohibit such trading by executives because of the potential for conflicts of interest. Indeed, Reuters found that McClendon, 52, was granted greater leeway to participate in external ventures than were his top lieutenants.
The 2009 contract did, however, limit McClendon in at least one way: Months after his personal hedge fund shut down, the agreement explicitly banned McClendon from taking an active role in any hedge fund.
The contract raises new questions about what Chesapeake board members knew of McClendon's personal investments, and whether his dealings might be at odds with his fiduciary responsibilities as head of the second-largest natural gas producer in the United States.