This company’s had some management problems, but we still like it: Its profits are higher than expected, despite all, and its net income is up 2 cents per share this year, compared to losses of 11 cents last year.
Let’s look at the management meltdown first, and then we’ll get to the good stuff.
On 29 March, an uncomfortable conflict of interest issue saw Chesapeake Energy Corp. (NYSE:CHK) move to replace its CEO Aubrey McClendon. Stock prices were down and investors were revolting. McClendon actually co-founded the company, but investors didn’t like his track record, and he had already lost his post as chairman in 2012, so it was only a matter of time before he was replaced as CEO. Shareholders weren’t fond of McClendon’s management missteps and the company’s stagnating performance. But what made things worse was shareholder suspicions that McClendon was using his personal stakes in thousands of company-owned wells which allowed him to get over $800 million in private loans. While this was a clear conflict of interest and McClendon was cleared of “intentional” wrongdoing, the damage was done and shareholders wanted him out. McClendon’s right-hand man, COO Steven Dixon has replaced him temporarily.
But there’s more… On 6 May, Chesapeake accepted the resignation of another top guy, board director Louis A. Simpson (no reason given, and he’s only been there 2 years). His spot will…