Chesapeake to replace McClendon as chairman

Tue May 1, 2012 5:13pm EDT
 
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By Anna Driver and Brian Grow

HOUSTON (Reuters) - Natural gas producer Chesapeake Energy Corp will split the jobs of chairman and chief executive, and bring an early end to a program that granted CEO Aubrey McClendon stakes in company wells, an arrangement that sparked investor anger and potentially created serious conflicts of interest.

McClendon, a co-founder of the company, will be replaced as chairman by an independent, non-executive chairman, and the arrangement that allowed McClendon to buy a 2.5 stake in each of Chesapeake's wells -- the Founder Well Participation Program (FWPP) -- will end 18 months early, in June 2014. McClendon will receive no compensation whatsoever from the program, according to a statement by the company.

Chesapeake was under pressure from one of the company's largest shareholders to agree to an early end to the FWPP, which had been scheduled to run through 2015. Chesapeake's board said last week that it planned to negotiate an early termination of the plan.

"We are pleased that the board has listened to our input and believe it has made the right decision by ending the FWPP early and seeking an independent chairman," O. Mason Hawkins, head of Southeastern Asset Management, said in Chesapeake's statement.

The comment was the first from Hawkins, a reclusive investor based in Memphis, Tennessee, whose firm owns 13 percent of Chesapeake.

The oil and gas company, the second-largest producer of natural gas, also reported a smaller quarterly net loss. McClendon will speak to investors on the company's earnings call on Wednesday.

In response to the changes at the company, Chesapeake shares rose substantially, closing 6 percent higher at $19.60 on the New York Stock Exchange. After the close of regular trading, the stock fell 2.5 percent, however.

GOVERNMENT SCRUTINY   Continued...

 
Chief Executive Officer, Chairman, and Co-founder of Chesapeake Energy Corporation Aubrey McClendon walks through the French Quarter in New Orleans, Louisiana March 26, 2012. REUTERS/Sean Gardner