Chesapeake Demoted Top Lawyer Who Defended CEO’s Loans

Chesapeake Energy Corp. demoted the lead counsel who defended Chief Executive Officer Aubrey McClendon’s use of private stakes in company-operated natural-gas wells to obtain more than $800 million in personal loans.

In the first executive reshuffling since Chesapeake stripped McClendon of the chairman’s role and replaced more than half its directors in June, General Counsel Henry J. Hood was replaced as head of Chesapeake’s legal department by James R. Webb, the Oklahoma City-based company said in a statement today.

Webb, a partner at the McAfee & Taft law firm, has been working for Chesapeake on a contract basis as chief legal counsel for the past four months, according to the statement. Hood will retain oversight of the company’s land and regulatory departments, Chesapeake said.

“This does seem like a demotion for Henry Hood,” Philip Weiss, an analyst at Argus Research Corp. in New York, said in an e-mailed statement today. “Based on what we see here, he’s seen his responsibilities scaled back.”

Hood issued a statement on April 18 that said Chesapeake directors were “fully aware” of the existence of the personal loans McClendon obtained to finance his share of expenses for private stakes in thousands of company wells.

On April 26, Chesapeake backtracked, saying in a statement that although the board was “generally aware” of the CEO’s loans, it hadn’t vetted the arrangements.

The directors announced an internal review of McClendon’s personal transactions the same day. Jim Gipson, a Chesapeake spokesman, didn’t immediately respond to an e-mail or voice mail left at his office outside of regular business hours today.

Chesapeake fell less than 1 percent to $19.36 a share at the close in in New York.