Chesapeake shakes up board under pressure
By Anna Driver and Brian Grow
(Reuters) - Top shareholders of Chesapeake Energy Corp on Monday grabbed more control of the nine-member board of directors after a governance crisis and poor financial performance brought intense pressure to reform the natural gas producer.
Chesapeake said it would replace four directors on the nine-member board. Mason Hawkins's Southeastern Asset Management will get three seats and billionaire Carl Icahn will get one. The selection of a new independent chairman must be approved by the new board members.
Chesapeake said the new board and the independent chairman will be announced on or before June 22, but did not specify which current members would step down after the four new directors are appointed.
Chesapeake is under pressure to sell assets and cut spending to reduce debt after tumbling natural gas prices have pinched profits. Shareholders have also lost confidence in the company because of governance issues.
It is not clear what changes the new board members will seek, but both Hawkins and Icahn have said in regulatory filings that an outright sale of the company should be considered.
Chesapeake shares rose 6.4 percent to $16.59 in afternoon New York Stock Exchange trading. Analysts and investors characterized the changes as mostly constructive.
"I think these changes are positive because you'll have four board members representing shareholders plus one who shareholders think is favorable to them, Louis Simpson," said Joseph Allman, oil and gas industry analyst at JPMorgan in New York. "The board will push changes. That is, less spending and additional asset sales."
At the very least, the board restructuring means Chief Executive Aubrey McClendon will be monitored much more closely. Continued...