In the latest blow to Oklahoma City-based Chesapeake Energy and its CEO, Aubrey McClendon, a lawsuit is seeking to recover millions of dollars that were allegedly "wasted by Chesapeake's executive officers and board of directors" through a perk allowing personal use of private jets.
The lawsuit was filed Tuesday, May 8, by Chesapeake shareholder Gilberta Norris, of Exmore, Virginia, and names McClendon, along with the company's board of directors. In the suit, which has portions redacted as part of a confidentiality agreement between the plaintiff and defendant, Norris claims McClendon and the Board have been misleading shareholders for years about the true extent of the company's use of private jets.
WEB EXTRA: Chesapeake Energy Timeline
According to published reports, Chesapeake has fractional interests in 22 different jets that are operated by NetJets, and Chesapeake executives and directors are allowed to use the aircraft for business, as well as, personal trips. The lawsuit states that Chesapeake reported almost $14 million worth of personal flights by executives and directors between 2007 and 2011. But the suit goes on to claim that, based on documents obtained at the plaintiff's request, the actual cost to shareholders for personal use of the jets is about $10 million per year higher.
The lawsuit claims that the board has failed to comply with relevant reporting guidelines, and breached its fiduciary duty to shareholders.
This legal action brings to, at least, a dozen the number of lawsuits filed against Chesapeake in the last couple of weeks, all related to recent reports of possible conflicts of interest and poor corporate governance.
Read the entire lawsuit here.