The Joplin Globe, Joplin, MO

Business

June 4, 2012

Chesapeake to replace 4 directors in nod to Icahn

OKLAHOMA CITY — Just a week after taking a stake in Chesapeake Energy Corp., activist shareholder Carl Icahn has helped orchestrate a shake-up at the nation’s No. 2 natural gas producer.  

Chesapeake said Monday it plans to replace four of its existing board members in the next few weeks. The decision follows extensive talks with Icahn and Chesapeake’s biggest shareholder, Southeastern Asset Management.

Icahn recently acquired a 7.6 percent stake in Chesapeake. He said the board needed some fresh blood in order to manage a huge debt load and properly oversee company management, including Chief Executive Aubrey McClendon.  

The agreement calls for Icahn or a person he chooses to take one seat on the board. Icahn will make that decision before the new board is put into place. Southeastern Asset Management, which holds a 13.6 percent stake, will select three board members. A fifth board member is retiring.

Icahn’s Chesapeake stock purchase was disclosed in a regulatory filing last month. He spent about $785 million for 50.1 million shares. Icahn is known for investing in companies and aggressively calling for change.

Chesapeake’s board has been under fire for allowing McClendon to borrow money from a company that it was doing business with, run a hedge fund that bet on oil and gas prices and for allowing him the perk of buying personal stakes in company wells.

Chesapeake, along with other natural gas companies, has been hit hard by falling natural gas prices. The Oklahoma City company’s shares have lost almost half their value in the past year. They rose 3 percent to $16.04 in morning trading on Monday.

“We are pleased that Chesapeake is being responsive to issues raised by us and many of the company’s other shareholders. These steps to reconstitute the Board will enhance oversight and provide greater accountability,” Southeastern Asset Chairman and CEO O. Mason Hawkins said in a statement.

Chesapeake is seeking a new board chairman after agreeing last month to strip McClendon of that title. The company has agreed that the selection must be approved by Icahn and Southeastern Asset Management.  McClendon will remain as CEO and a board member. The selection will be made by June 22.

“I am fully supportive of these measures and remain focused on executing Chesapeake’s strategy,” McClendon said in a statement.

Chesapeake’s board will continue to have nine members.

 

1
Text Only
Business
Poll

The United States is considering deploying about 150 soldiers for military exercises to begin in Poland and Estonia in the next few weeks, following Russia's buildup of forces near its border with Ukraine. Do you think we should deploy these troops?

Yes
No
     View Results
Facebook
Twitter Updates
Follow us on twitter
NDN Video
Raw: More Than 100,000 Gather for Easter Sunday Raw: Greeks Celebrate Easter With "Rocket War" Police Question Captain, Crew on Ferry Disaster Raw: Orthodox Christians Observe Easter Rite Ceremony Marks 19th Anniversary of OKC Bombing Raw: Four French Journalists Freed From Syria Raw: Massive 7.2 Earthquake Rocks Mexico Captain of Sunken SKorean Ferry Arrested Raw: Fire Destroys 3 N.J. Beachfront Homes Raw: Pope Presides Over Good Friday Mass Raw: Space X Launches to Space Station Superheroes Descend on Capitol Mall Man Charged in Kansas City Highway Shootings Obama Awards Navy Football Trophy Anti-semitic Leaflets Posted in Eastern Ukraine Raw: Magnitude-7.2 Earthquake Shakes Mexico City Ceremony at MIT Remembers One of Boston's Finest Raw: Students Hurt in Colo. School Bus Crash Deadly Avalanche Sweeps Slopes of Mount Everest