Napa – Harrington Investments, Inc. (HII), a Napa-based investment advisory firm specializing in socially responsible investing, announced today that it is divesting its entire holding in Chesapeake Energy Corporation (CHK) due to the corporation’s poor environmental record and its lack of accountability to shareholders.
In a recent Bloomberg Businessweek article it was reported that the Pennsylvania Environmental Protection Department cited over 40 natural gas well operators more than 900 times for “environmental health and safety” violations.Leading this unworthy group with 109 citations was Chesapeake Energy.
“We have a fiduciary duty to our clients to invest in companies that show a strong commitment to the environment.Chesapeake clearly fails to do so,” stated John Harrington, President of Harrington Investments, Inc.”Chesapeake obviously violates our investment criteria when it consistently and flagrantly violates environmental standards.”
The board at Chesapeake Energy also has one of the worst records when it comes to executive compensation,” added Harrington. “Because of their continual disregard for shareholders interests and the environment, we are divesting all 56,025 shares of our clients’ assets in Chesapeake stock, valued at approximately $1.9 million.”
Perhaps the most egregious act by the board occurred in 2008, when CEO Aubrey McClendon was awarded a $77 million bonus even though the stock price of Chesapeake fell 60 percent. Shareholders filed a lawsuit against McClendon, claiming the board of directors ignored the company’s compensation policies. McClendon was able to get the suit dismissed due to a technicality.
“Such a lack of judgment by the board on executive compensation shows a complete disregard for owners and the board’s fiduciary duties,” Harrington concluded.
According to HII, Chesapeake is also unconcerned with consulting shareholders when it comes to their political activities, donating lavishly to conservative candidates without bothering to consult with any of the owners of the company.
Nowhere is this unabashed political activism more evident than in Pennsylvania, where Chesapeake gave $377,319 in lobbying cash to state politicians from 2007-2009. McClendon funneled $450,000 to gubernatorial candidate Tom Corbett via the State Republican Leadership Committee. Since Corbett’s victory, Chesapeake has obtained 839 Marcellus Shale drilling permits in Pennsylvania, more than any other company, and has drilled at 126 sites, making it the second-biggest operator in the region.
Harrington Investments, Inc. is a 28 year-old Napa, California-based socially responsible investment advisory firm that manages assets of individual and institutional investors requiring social and environmental as well as financial portfolio performance. Harrington utilizes a comprehensive social and environmental screen, commits clients’ assets to community investing and engages in shareholder advocacy, recently introducing shareholder resolutions specifically on U.S. economic security, corporate governance, CEO compensation and advancing human rights and sustainability as part of corporate officers’ fiduciary duties.