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Exclusive Interview With Chesapeake CEO

Instead of a white helmet used on drilling sites, Aubrey McClendon might want to find himself a combat helmet. The Chesapeake CEO is coming under heavy fire.

McClendon has been the object of shareholder ire for the past few months after disclosures revealed he was one of the highest paid executives in the Fortune 500, despite his company’s plunging share price.

Big Job, Big Salary

According to the Wall Street Journal McClendon’s compensation package “included a one-time $75 million bonus, a $975,000 base salary, and $32.7 million in stock.” Shareholders argued the amounts were excessive and immediately thereafter threatened legal action.

But that’s not all that's vexing this CEO.

In an SEC filing, the company revealed it purchased a map collection that McClendon owned for $12.1 million. Chesapeake’s board has defended all its actions. "These maps complement the interior design features of our campus buildings and contribute to our workplace culture," the board said.

And as for McClendon’s compensation, Chesapeake's directors say it recognizes his "extraordinary contribution" which they say added $10 billion in "intrinsic value" to the company.


Many CEOs would retreat in the face of such negative news, but not McClendon. He joined us for an interview.

He told us candidly he's eager to address this issue. "I would love to address it," he said, but because the situation is subject to litigation McClendon was very limited in what he was permitted to say.

He did tell us he understands that the pay package does not look good in this environment. "Sure I understand that," he said.

“We have filed documents with the SEC that explain the board’s rationale. Unfortunately the whole situation is subject to litigation so I can’t say more.”

The Nat Gas Game

He could however provide us with his shrewd insights on nat gas.

Earlier in the week, Chesapeake reported a larger first-quarter loss due to a sharp decline in demand for natural gas. Investors didn't hesitate to punish the stock.

But Aubrey McClendon remains bullish. He tells Fast Money, “going forward from here I think we’ve seen the lows in nat gas prices. I now expect to see prices bounce between $3.50 and $4.50."

Tim Seymour, however, is skeptical. Fast Money's "Ambassador" doesn't see strong demand from emerging markets yet, especially industrial giants such as China and India.

But maybe it's not demand McClendon is attempting to influence. Maybe it's supply. "I expect to see production drop by the summertime and for us to be in balance by the end of the year," McClendon says. "Ultimately, that sets up well for a great year, next year.”

Hopefully Chesapeake stock will enjoy a similar recovery. Over the past 52-weeks shares of Chesapeake are down 63%.

What’s the trade?

I don’t think it’s a stock to short, counsels Guy Adami, because nat gas is such a wild card. But it’s not an entry point either.

Sometimes you just gotta’ chill, adds Jeff Macke.


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Trader disclosure: On May 5th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (AAPL), (PCLN), (LVS), (SDS), (GE), (NFLX), (IMAX), (GS); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AAPL), (BAC), (BX), (RIO), (SBUX); Najarian Owns (BX) Call Spread; Najarian Owns (DFS) Calls; Najarian Owns (ERTS) Calls; Najarian Owns (FIG); Najarian Owns (MCD) And Is Short (MCD) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (PALM) And Is Short (PALM) Calls; Najarian Owns (XLI) Call Spread; Najarian Owns (XHB) Call Spread

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