The Oklahoma City natural gas giant has agreed to replace four board members with candidates proposed by its two largest shareholders.
Southeastern Management Co., which has a 13.6 percent stake in Chesapeake, will propose three new directors; Billionaire activist investor Carl Icahn, who recently purchased a 7.6 percent stake, will propose one.
A fifth board member is set to retire at the company’s annual shareholder meeting on June 8, and will be replaced by a new independent chairman, the company announced Monday. Chesapeake has been searching for a new chairman to replace CEO Aubrey McClendon, who agreed last month to step down amid scrutiny of his personal finances.
McClendon will relinquish the chairmanship once his replacement is appointed, and Chesapeake will announce the new board composition later this month, it said in a statement.
The move comes as the oil-and-gas company has been grappling with mounting debt, a string of corporate-governance controversies and low natural-gas prices, writes the Wall Street Journal’s Tess Stynes.
“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,” McClendon said in a statement. “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.”
Representatives for Southeastern and Icahn praised the move in prepared statements.
“These steps to reconstitute the Board will enhance oversight and provide greater accountability,” said O. Mason Hawkins, chairman and CEO of Southeastern.
Icahn said the response showed the board’s willingness to listen and respond to shareholder concerns.
“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,” Icahn said. “We enjoyed a very good relationship when I acquired almost 6% of the Company’s stock in late 2010 and I look forward to a similarly constructive relationship now.”