At the behest of its two largest investors, Chesapeake Energy Corp. is poised to overhaul its board of directors.
The Oklahoma City-based oil and natural gas producer announced Monday it will replace four members of its board.
Three of Chesapeake’s new board members will be selected by Southeastern Asset Management Inc, a Memphis-based money manager that holds more than 13 percent of the company’s stock.
The fourth will be activist investor Carl Icahn, who recently acquired about 7.6 percent of the company’s stock, or his designee.
Four current Chesapeake board members, who were not identifed in Monday’s news release, will resign once their replacements are named.
“We are pleased that Chesapeake is being responsive to issues raised by us and many of the Company’s other shareholders,” said Southeastern CEO O. Mason Hawkins. These steps to reconstitute the board will enhance oversight and provide greater accountability.”
Icahn echoed that reaction in Chesapeake’s announcement.
“We appreciate the board’s willingness to listen to shareholders and to respond appropriately. Under Aubrey’s leadership, Chesapeake has assembled great assets and I am confident I can help the company create significant shareholder value from these assets. We enjoyed a very good relationship when I acquired almost 6 percent of the company’s stock in late 2010 and I look forward to a similarly constructive relationship now.”
A fifth new board member will be appointed in place of retiring director Charles T. Maxwell. He will be replaced by a new independent chairman, who will take the place of embattled Chesapeake co-founder Aubrey McClendon.
McClendon will remain the company’s CEO.
“Today’s announcement is the culmination of a continuing effort by Chesapeake’s board to address shareholder concerns and better position the company for the future. I am fully supportive of these measures and remain focused on executing Chesapeake’s strategy. I have great respect for the talent, commitment and dedication of our current board members, each of whom has played a key role in helping build our successful company. At the same time, I look forward to working with our new directors to continue creating substantial shareholder value from the extraordinary set of assets Chesapeake has acquired and developed in recent years.”
Lead independent director Merrill A. “Pete” Miller Jr. said the changes to Chesapeake’s board will enhance the company’s governance and benefit all of its shareholders.
“We greatly appreciate the substantial contributions of all of our directors, but recognize our shareholders’ desire for change. Following implementation of these initiatives, the Chesapeake board will have been substantially reconstituted with five new independent directors, including a new independent chairman, in addition to Lou Simpson who joined the board last year.”
Several institutional investors in Chesapeake have called for leadership changes at the company’s upcoming annual meeting.
The meeting is scheduled for Friday, but a number of shareholders who have filed lawsuits against the Chesapeake board have asked a federal judge to postpone it until the company discloses additional information about McClendon’s personal finances.