"I have never seen a more shameful document than the Chesapeake proxy statement," shareholder Jeffrey Bronchick wrote in a letter to Chesapeake's board. "If I could reduce it to one page, I would frame and hang it on my office wall as a near perfect illustration of the complete collapse of appropriate corporate governance." What appears to have happened is that Chesapeake's board of directors decided to serve as a personal bailout for McClendon, who had nearly his entire stake in Chesapeake wiped out through margin calls back in September. His net worth evaporated and now the too chummy board of directors has opted to give him a helping hand. Perhaps the most egregious is the company's decision to buy his collectibles with $12.1 million of shareholder money. It just looks so bad. Sure, the company will say it was done at arm's length but here's the question: If it was, why couldn't McClendon sell to someone else at arm's length? Why do something that looks so incredibly slimey?

Not so long ago, Wall Street observers like Jim Cramer were enamored of McClendon, but I've always thought he was a slimeball. In 2004 he donated $250,000 to the Swift Boat veterans group for the purpose of discrediting Senator John Kerry's military service. Regardless of your political leanings, that affair was gutterball politics at its lowest ebb, and indicative of a CEO without a strong moral compass.

The pay package handed to McClendon for a period of abysmal returns to shareholders suggests a board of directors that was too chummy and lacking in independence.