UPDATE 1-Chesapeake Energy shareholders reject board declassification

Fri Jun 14, 2013 1:14pm EDT

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June 14 (Reuters) - Chesapeake Energy Corp shareholders on Friday rejected a proposal that would have made it easier to replace the entire board of directors of the natural gas driller in one step.

The proposal to declassify the board, which the board itself supported, would have eliminated the current board structure, where the three-year terms of the eight directors are staggered.

The company has had a tumultuous past two years, during which a series of Reuters investigations led to civil and criminal investigations of the company.

Prominent investors, including Carl Icahn, agitated last year and earlier this year for a shakeup of management and the board, but the staggered board system stood in the way of replacing all directors at the same time.

Some of the company's directors left last year in response to questionable enmeshing of personal and corporate interests by Aubrey McClendon, the company's founder and former chief executive.

Only 60 percent of shares outstanding voted for the proposal to declassify the board. At least 66.7 percent was needed to change Chesapeake's certificate of incorporation.

A proposal that would have changed the certificate of incorporation to allow a simply majority of shareholders to change certain rules was also defeated, as was a proposal to allow shareholders with relatively small holdings to nominate new directors.

Shareholders overwhelmingly rejected a proposal to create a risk oversight committee. The proposal received only 4 percent of the votes cast.

Shareholders also soundly rejected a proposal to move the company's incorporation to Delaware from Oklahoma.

The voting came at the company's annual meeting in Oklahoma City.

Chesapeake shares were down 2.3 percent to $20.51 in afternoon trading.

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