* No irreparable injury if June 8 meeting held - judge
* Shareholders sought more information about CEO dealings
* Chesapeake shares closed up 7.1 pct
By Jonathan Stempel
June 6 Chesapeake Energy Corp need not
delay its scheduled annual meeting on Friday to allow
shareholders more time to investigate the financial dealings of
the natural gas company's embattled chief executive, Aubrey
McClendon, a federal judge ruled.
Chief Judge Vicki Miles-LaGrange of the U.S. District Court
in Oklahoma City on Wednesday said shareholders who sought a
postponement did not show they would suffer "irreparable injury"
if the meeting were held as scheduled.
She noted that shareholders could later ask that votes taken
at the meeting be voided and rescheduled if Chesapeake had
withheld material information from its proxy filings. The judge
also said the U.S. Securities and Exchange Commission's approval
of Chesapeake's filings deserved "some weight."
Many shareholders have expressed anger about what they
consider poor corporate governance and high executive pay at
Chesapeake, which has been under pressure to sell assets to
reduce debt as falling natural gas prices weigh on profit.
Shareholders said delaying the annual meeting was necessary
so they could learn more about McClendon's compensation and
details about his loans to finance his investments in company
wells, which they said suggest a conflict of interest.
Chesapeake countered that shareholders already had abundant
information about McClendon's participation in and financing for
the Founder Well Participation Program (FWPP) from proxy filings
and media reports. It also said his pay was not on the ballot.
Matthew Houston, a lawyer for the shareholders, did not
immediately respond to a request for comment.
"We believe the judge made the correct decision and look
forward to holding our annual shareholder meeting as scheduled,"
Chesapeake spokesman Michael Kehs said in an e-mailed statement.
Separately, Chesapeake is in late-stage talks to sell nearly
all its pipeline assets to Global Infrastructure Partners for
more than $4 billion, a person familiar with the matter said.
The Oklahoma City-based company's shares rose 7.1 percent on
Wednesday amid reports about that proposed sale, which could
help close a $9 billion to $10 billion funding shortfall.
CEO PLEDGED WELL STAKES
Chesapeake, its board and McClendon have been under scrutiny
since Reuters reported in April that McClendon had pledged
personal stakes in thousands of company wells as collateral for
more than $1 billion of loans.
McClendon also ran a $200 million hedge fund from his office
and has been allowed to profit when his oil and gas interests
are sold alongside Chesapeake's, Reuters has reported.
On Monday, Chesapeake agreed to revamp its board and replace
four of nine directors with appointees chosen by Southeastern
Asset Management and activist investor Carl Icahn, who own
respective 13.6 percent and 7.6 percent stakes.
The board would then choose a new independent chairman to
succeed McClendon, who would remain chief executive.
McClendon also agreed last month to end the FWPP earlier
than planned. That program allows him to buy a 2.5 percent stake
in every well that Chesapeake drills.
In Wednesday trading, Chesapeake shares closed up $1.21 at
$18.21 on the New York Stock Exchange. The shares traded at
$19.12 before the first Reuters report on April 18, and had
fallen as low as $13.32 on May 17. Their 52-week high is $35.75
set last August.
The case is Deborah G. Mallow IRA SEP Investment Plan v.
McClendon et al, U.S. District Court, Western District of
Oklahoma, No. 12-00436.