Chesapeake Energy Corp. on Thursday named five new independent directors in a move the company said will provide improved oversight and responsiveness to shareholders. One of those directors is Chesapeake's new chairman, former Conoco and ConocoPhillips executive Archie W. Dunham.
“It's a big step in the right direction to have a board so completely independent and filled with outsiders to the company,” said Fadel Gheit, an analyst with Oppenheimer in New York.
While the new directors have few previous ties to Chesapeake, the board's new leader is no stranger to the Oklahoma oil patch.
Dunham, the former chairman of ConocoPhillips Inc. and former CEO of then-Ponca City-based Conoco Inc., is the second chairman in Chesapeake history. He replaces co-founder Aubrey McClendon, who will remain CEO and a member of the board.
Steve Agee, dean of Oklahoma City University's Meinders School of Business, said Dunham is a “dream” choice for Chesapeake.
The University of Oklahoma graduate rose through the ranks at Conoco after getting his start there as an engineer.
“I think he knows every facet of their businesses,” he said. “I think he'll be a great chairman for the company.”
McClendon praised Dunham's appointment in a statement Thursday.
“Archie is extraordinarily well regarded both inside and outside of the industry, and we are confident he is the right person to lead our board as we complete the transition from the asset identification and capture phase of Chesapeake's history to now harvesting those assets,” he said.
Dunham recognized Chesapeake's management for building a strong portfolio of oil and natural gas assets.
“As I evaluated this opportunity, I was attracted by the clear mandate to provide strong oversight while working closely with the company's exceptional management team, talented employees and reconstituted board in a situation where we have the opportunity to create substantial value for all shareholders in the years to come,” he said.
Shares show decline
Chesapeake shares slipped 92 cents, or 4.8 percent, to close at $18.12 a share Thursday, a day when the broader S&P 500 slipped 2.2 percent.
Thursday's announcement follows just more than two months after reports that McClendon used his personal stake in Chesapeake wells as collateral for up to $1.5 billion in personal loans from some of the same lenders that have business ties with Chesapeake.
In the wake of the revelations, shareholders groups increasingly have called for changes to the board.
O. Mason Hawkins, chairman and CEO of Southeastern Asset Management, Chesapeake's largest shareholder, welcomed the changes Thursday.
“Chesapeake has the assets and the opportunity to become the U.S.'s pre-eminent, low-cost energy producer and to significantly grow its value per share,” Hawkins said. “We believe this board will prudently guide, assist and complement management's efforts to capture its potential.”