Nine months after Chesapeake Energy Corp. shareholders overwhelmingly rejected him, Oklahoma State University President Burns Hargis has been replaced on the company's board.
Hargis submitted his resignation after receiving only 26 percent of the vote at June's annual shareholders' meeting, but the board opted to keep him on as head of the audit committee to complete a review of CEO Aubrey McClendon's finances.
The board announced Thursday it had accepted Hargis' resignation, about two weeks after announcing its review found no proof of intentional misconduct by McClendon, who has faced scrutiny for arranging loans to finance his stake in the company's wells from equity firms that have invested in Chesapeake.
“With the completion of my final assignment, it is the appropriate time for me to step aside,” Hargis said.
The office of New York City Controller John C. Liu had urged other Chesapeake shareholders to vote against Hargis and former board member Richard Davidson at last year's annual meeting. The city's pension funds own nearly 1.7 million shares of Chesapeake stock.
“His overdue departure closes a costly chapter for the Chesapeake board, which must now focus like a laser on restoring long-term shareowner value,” said Michael Garland, assistant comptroller for environmental, social and governance.
Chesapeake Chairman Archie Dunham praised Hargis for his work with the company.
“He has willingly invested his time, talents and expertise for the sole purpose of helping make Chesapeake successful,” Dunham said. “We are grateful to Burns for remaining on the board to see several important assignments though to completion. ”
Former Pride International Inc. CEO Louis A. Raspino has been appointed to replace Hargis, who had been on Chesapeake's board since 2008.
Dunham and Raspino worked together when the former Conoco executive was a member of Pride International's board. Raspino left the drilling service company in May 2011 after it merged with London-based Ensco.
Raspino currently serves on the board of two other public companies: Dresser Rand Corp. and Forum Energy Technologies.
“With his extensive operational, strategic and financial expertise in America's oil and natural gas industry combined with his sterling reputation on matters of corporate governance, Louis Raspino is the ideal person to chair the audit committee of the Chesapeake board,” Dunham said.
Raspino will stand for election to the board at Chesapeake's annual meeting of shareholders in June.
“It is an honor to be selected to join the board of one of our country's leading energy producers — a company that played a leading role in changing the U.S. energy supply paradigm from scarcity to abundance,” Raspino said. “I look forward to learning more about what I believe are world-class assets and human talent that together hold tremendous potential for future value creation.”
Raspino is the sixth new member to join Chesapeake's nine-member board in less than a year, as shareholder unrest resulted in an overhaul. McClendon will join the exodus April 1 when he leaves the company after losing a power struggle with the new board.
The board is expected to name a new chief executive before McClendon's departure.