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Aubrey McClendon to relinquish position as Chesapeake board chairman, retain CEO title

Chesapeake Energy Corp. will get an independent chairman to replace founder Aubrey McClendon, who will remain the company's chief executive officer.
BY JAY F. MARKS Business Writer Published: May 1, 2012

A leadership change is under way at Chesapeake Energy Corp.

The Oklahoma City natural gas and oil producer announced Tuesday CEO Aubrey McClendon will relinquish his position as its board chairman, a role he's held since co-founding the company in 1989. McClendon will continue to serve as chief executive officer and will retain a seat on the board.

The company did not indicate who would replace McClendon as chairman or when the change would occur.

S&P analyst Scott Sprinzen said it was not a surprise that Chesapeake opted to install an independent board chairman.

“With all the pressure from different constituents that the board and management are under, I think it would have been surprising if this step had not been taken,” Sprinzen said.

The reaction was similar in Oklahoma.

“I think at the end of the day all parties realized from a corporate governance perspective that this move was unavoidable given what has transpired,” said Jake Dollarhide, CEO of Longbow Asset Management Co. in Tulsa. “Is it a good thing for the company? I don't think you're going to know that for a few years.”

Chesapeake also said Tuesday it has negotiated an early end to McClendon's well participation program, which has been the source of considerable criticism over the past couple of weeks since Reuters reported he had secured up to $1.1 billion in loans using his stake in the company's wells as collateral.

Merrill A. “Pete” Miller Jr., Chesapeake's lead independent director, said the board is committed to serving the company's shareholders.

“We believe separation of the chairman and CEO roles will improve Chesapeake's corporate governance and the early termination of the FWPP (Founder Well Participation Program) will eliminate a source of controversy, both of which should send a positive signal to the market and improve shareholder value,” said Miller, president and CEO of Houston-based National Oilwell Varco. “The board appreciates Aubrey's cooperation in these measures and has confidence in Chesapeake's future, based on its superb assets, strong management team and talented employees.”

Chesapeake's stock gained about 6 percent on Tuesday's news, closing up $1.16 at $19.60 a share, but reversed much of those gains in after-hours trading following its first-quarter earnings report.

Chesapeake also will have an opening on the board this summer because 80-year-old energy analyst Charles T.

April 27: Power Play Blog - Report: Chesapeake CEO... April 30: Power Play Blog - Chesapeake upgraded, stock... April 26: Power Play Blog - Investment firm defends loans...

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