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)