Chesapeake Energy Corp. directors on Wednesday released a letter to shareholders defending the board and its current directors.
The letter points out that Chesapeake directors have made “significant changes” to the company's executive compensation program and last week cut its compensation and benefits to directors.
“These measures are responsive to shareholder feedback and ensure that Chesapeake's compensation programs are fully aligned with peers while reinforcing the link between directors' and executive officers' interest and those of shareholders,” the letter stated.
Wednesday's letter specifically addressed concerns raised last week by New York City Comptroller John C. Liu, who called for shareholders to vote against Oklahoma State University President Burns Hargis and retired Union Pacific Corp. Chairman Richard K. Davidson, the two Chesapeake directors up for re-election at next month's annual meeting.
The California Public Employees' Retirement System, Institutional Shareholders Services and Egan-Jones Proxy Services each have issued similar requests over the past two weeks.
The shareholders groups have criticized Chesapeake's directors for issues including allowing CEO Aubrey McClendon to use his personal stake in Chesapeake wells as collateral for up to $1.1 billion in personal loans and for allowing McClendon to operate a hedge fund that traded in commodities, including natural gas.
“The continuing directors serving on this board have repeatedly failed to respond to significant shareholder concerns and emerging best practices, demonstrating a lack of independent oversight at a board chaired by a founder/CEO,” ISS said last week.
Chesapeake directors, however, pointed out Wednesday that they have taken “swift action to address shareholder concerns,” including ending the Founders Well Participation program 18 months early in June 2013 and agreeing to name a new, independent chairman after seeking input from shareholders.