Chesapeake defends board to shareholders

Wed May 23, 2012 5:54pm EDT

Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, on April 17, 2012. REUTERS/Steve Sisney

Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, on April 17, 2012.

Credit: Reuters/Steve Sisney

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(Reuters) - Chesapeake Energy Corp defended its board of directors in a letter to shareholders on Wednesday as investors push for governance changes at the U.S. oil and gas company.

Analysts and investors have called for change at the company after Reuters reported that Chief Executive Officer Aubrey McClendon had taken out more than $1 billion in loans using his interest in thousands of company wells as collateral.

McClendon's lender, EIG Global Energy Partners, is also a big source of funding for Chesapeake, a situation that could put the executive's interest at odds with shareholders' interests, analysts and academics have said.

"Chesapeake`s board is comprised of independent, highly qualified and accomplished professionals who have the skills and experience necessary to serve on our board," the company said in the letter to investors.

The letter was a response to a letter last week by New York City Comptroller John Liu in which he urged shareholders to withhold support for two Chesapeake directors who are up for re-election.

Liu wrote that shareholders "urgently" needed new directors who would have strong oversight of McClendon.

Chesapeake said in the letter that it had made a number of changes since the April 18 Reuters report, including cutting director compensation 20 percent.

"The changes now being offered, overdue and only incremental, may address some symptoms of a captive board, but hold harmless the root problem — the directors themselves and their failure to protect long-term shareowner value," Liu said in a statement on Wednesday.

Chesapeake's annual meeting is scheduled for June 8. Investors have asked a judge to postpone the meeting, arguing that more disclosures are needed about McClendon's well interests.

(Reporting by Anna Driver in Houston; editing by Matthew Lewis)

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Comments (2)
Harry079 wrote:
“Chesapeake defends board in letter to shareholders”

“Chesapeake`s board is comprised of independent, highly qualified and accomplished professionals who have the skills and experience necessary to serve on our board,” the company said in the letter to investors.

When Mitt Romney said that Companies are people too I thought he was crazy. Well I still think he’s crazy but here is another example of a Company speaking and writing letters.

May 23, 2012 5:09pm EDT  --  Report as abuse
changer405 wrote:
One of those board members is Frank Keating, a former governor who was caught using tax dollars to buy a private jet. How do you become successful in the United States? Corruption. This company is another example of how putrid the “good ol’ boy” system has made our business practices.

May 23, 2012 5:44pm EDT  --  Report as abuse
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