HOUSTON Chesapeake Energy Corp (CHK.N) shareholders on Friday approved a series of reforms that included the elimination of three-year terms for directors, deepening an overhaul that began in the months preceding the 2013 ouster of former Chief Executive Officer Aubrey McClendon.
Since McClendon's departure in April last year, the board under Chairman Archie Dunham and the company's largest shareholders, including billionaire Carl Icahn, have made reform a priority. Chesapeake had been criticized for McClendon's heavy spending and a governance crisis.
Preliminary results from the company's annual meeting, which was webcast, showed that 98 percent of Chesapeake's shareholders who voted backed measures to increase the size of the company's board of directors and to allow individuals or groups owning 3 percent or more of the company's shares to nominate directors.
Investors also voted by a 95 percent margin in favor of Chesapeake's pay packages for executives. In June of 2012, only 20 percent of the company's shareholders backed the compensation plan.
Erik Gordon, a professor at the University of Michigan's Ross School of Business who tracks governance issues, said he was encouraged by the changes.
"For all the talk about good governance, we rarely see a company take measures to improve itself," he said.
Icahn and top shareholder O. Mason Hawkins took control of the board of directors in June 2012 when Chesapeake faced financial peril and there was lax oversight of McClendon by the previous board.
Under Chief Executive Officer Doug Lawler who started the job about a year ago, Chesapeake has slashed spending, sold assets and promised to focus on drilling wells that will bring the best returns to shareholders.
For example capital expenditures soared above $13 billion under McClendon as he snapped up millions of acres to drill, but this year Chesapeake said it expects to spend little more than $5 billion.
Shares of Chesapeake, which is based in Oklahoma City, Oklahoma, are trading around a three-year high. On Friday, the stock was down 9 cents at $30.40 in afternoon New York Stock Exchange trading.
(Reporting by Anna Driver; Editing by Leslie Adler, Terry Wade and Tom Brown)