How The 1% Snuff It


What's "driving" the rich into a wall?

Not many of the 1% commit suicide. Sure, a hundred years ago moguls like C.W. Post and George Eastman chose to eat lead rather than waste away in pain like a commoner. (“My work is done. Why wait?” was Eastman’s laconic, nearly ad-copy suicide note.) Shame as a motivating force for suicide is strictly for the riffraff these days, but what about violent, passive-aggressive hostility? Two notable publicly traded companies, U-HAUL and Chesapeake energy, had CEO’s who committed suicide by car crash.

U-HAUL

U-Haul is a venerable name in van leasing and storage. It is so famous it is the punchline to the joke, “What does a lesbian bring on the second date?” It is the sort of brand that Warren Buffet would buy and run like a real company; however, the company pays only sporadic dividends and is not organized as dividend-paying REIT. U-Haul has always traded at a discounted multiple compared to its peers. The reason is simple: you have to factor in the batshit, lawsuit crazy, fist fighting family that owns the controlling stake. Murder, suicide, and mayhem have dominated news coverage for a quarter century, leaving shareholder value in the back seat.

The family patriarch L.S. Shoen started U-Haul in 1945 with a $5000 loan and built the moving company into an iconic (albeit erratic) brand name. Multiple marriages produced 13 children. The third child, Joe, would later maneuver to wrestle a majority stake away from his father. Joe even canceled his father’s health and retirement benefits. In 1999, L.S. Shoen drove his car at 80 miles per hour into a utility pole in Las Vegas. The coroner ruled the death a suicide.

So–an open and shut case? Ungrateful son steals company from under the father who built it from nothing; heartbroken father commits suicide. The end?

Not so fast.

Mark Shoen, in a 1994 Phoenix New Times article, stated: "People have to understand that L.S. Shoen is not a storybook father. He has a lot of personal demons of his own." Other statements from dissident family members intimated that L.S. more resembled Noah Cross, the villain from the film Chinatown who engaged in unspeakable acts. Where the truth lies, who knows? From the time L.S. retired in 1986, this extended Eugene O’Neil drama included: dozens of lawsuits; a suspicious murder of L.S.’s favorite daughter in law; accusations from the L.S. loyalists that Joe and others had conspired to murder the woman (an unrelated serial rapist later confessed to the crime); brothers fist fighting each other in boardroom meetings; and the senior Shoen’s final, “fuck-you cruel world” goodbye.

In 2012 U-Haul’s parent company reassured Wall Street, in effect saying, From now on the family is not going to sue, assault or kill each other! Low bar, but the stock rose over 400% in the ensuing years. Lately, the stock has based as investors wait for Joe Shoen to learn different management skills other than controlling his anger.

CHESAPEAKE ENERGY

In contrast to the self-made L.M. Shoen, Aubrey McClendon was born with a silver dipstick in his mouth. McClendon descended from Oklahoma’s Kerr-Magee fortune. At Duke University, McClendon minored in accounting and majored in history, with a special interest in what is euphemistically known to neo-confederates as “the war of northern aggression.” Perhaps the degenerate gambler dreamed that if he could corner the natural gas market, he could resurrect the Confederacy?

In 1989, McClendon and a frat buddy founded Chesapeake energy. Aubrey was able to transform the publicly traded company into his own compulsive gambling enabler. When the stock market tanked in 2008, McClendon received a margin call on an astounding 31 million shares. He had personally borrowed 1.1 billion dollars on margin so that he could compulsively buy yet more drilling leases for himself. The easy-peasy board of directors rewarded McClendon’s recklessness that year with salary compensation of 112 million dollars.

McClendon’s investing “strategy” was simple: One day the world is going to want much more natural gas, so I will beg, borrow and steal as many drilling leases as possible and one day it will pay off. (At one point around 2010, McClendon was the largest landowner in the United States.) McClendon was a “visionary” in the same way as Harvey Keitel’s cracked out compulsive gambling character in The Bad Lieutenant was a “visionary” in that one day the Dodgers would win a ball game.

Even the sycophantical board of directors got fed up with McClendon’s “vision” and in 2013 removed him as CEO (but kept him on the board). The price of LNG (Liquified Natural Gas) remained stubbornly low, for a variety of reasons. Most of the gas leases McClendon acquired required drilling of the land within 3-5 years or lose the lease. That put more LNG on the market and drove LNG prices down. Also, dreams of automobiles being converted to run on LNG never materialized. Exporting Natural gas has problems from the cost of shipment to lack of LNG infrastructure on other continents.

On March 16, 2016, McClendon was indicted by a federal grand jury for rigging the bids on drilling leases in Oklahoma. McClendon, through his lawyer, whined that he was being picked on, basically expressing everybody else does it. Why me, God?

The very next morning, instead of nailing himself to a cross, the whiney (ex?) billionaire drove a Chevy Tahoe sans seatbelt and accelerated it to 88 MPH, driving straight into a concrete viaduct. Instead of “Atlas Shrugged,” investors shrugged off Atlas. Chesapeake stock rose as much as 100% in the weeks that followed. Investors were relieved that a crazed gambler was finally out of the picture. Incredibly, the Oklahoma City coroner ruled the crash an “accident.” The gentleman’s agreement held.

You may have gotten the impression from too many viewings of Double Indemnity that Life Insurance companies do not pay out in the event of suicide. This is not necessarily true. Insurance policies vary by state, and many of them will pay out if you can wait two years before snuffing it. Other state laws are worded in a way that suggests, Hey, if your family can hire the right lawyers, they can collect on even a temporary life insurance policy. The family has so far suppressed information on whether there was a life insurance policy. It’s hard to know what would be more embarrassing at this point.

McClendon’s behavior was similar to Jesse Livermore, except that Livermore could actually make good trades. Livermore had the foresight to short stocks before the crash of 1929. McClendon had a reliably constant pattern of making one horrible bet after another. Livermore committed suicide in 1940 in fairly retrograde fashion: he wrote a note to his wife and then shot himself. How very passé! Innocent times indeed.

Death by auto accident is common, but suicide by car is rare. Speeding into a wall or a pole is an aggressively hostile yet self-pitying act, with a touch of plausible legalistic deniability. It seems neither men were ultimately concerned about policies for their families; rather, they wished to remain shifty liars right up to the end.

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