Chesapeake Energy Corp. shareholders will meet at 10 a.m. Friday in one of the most anticipated stockholders meetings in recent state history, but it is unclear exactly what the outcome will be.
At least some of the potential drama was removed this week when Chesapeake bowed to increasing shareholder pressure and met demands by activist shareholders Carl Icahn and Southeastern Asset Management, which together control more than 20 percent of Chesapeake's stock.
New questions may have emerged Thursday when Reuters reported on CEO Aubrey McClendon's tangling of company and personal business. For example, he used his 19.2 percent stake in the Oklahoma City Thunder, which is sponsored by Chesapeake, to secure loans in 2009 and 2010.
To an official in the office of New York City's comptroller, those details raised more questions about the perceived lack of oversight from Chesapeake's directors.
“It says a lot about Aubrey McClendon, but it says a lot more about the board,” said Michael Garland, director of corporate governance for New York City Comptroller John C. Liu. “Other CEOs might also like the same kind of perks he has, but their boards don't permit it.”
Fadel Gheit, an industry analyst with Oppenheimer in New York, said the article is “damaging and puts Aubrey in a very bad light.”
“The article was more negative than I thought and could impact future decisions by the board,” Gheit said. “It is most unfortunate and sheds the light on executive compensations, which are very excessive and must change or we will have riots beyond Occupy Wall Street.”
Amid the controversy over McClendon's personal loan arrangements, several institutional investors have urged shareholders to withhold votes for directors Burns Hargis, president of Oklahoma State University, and Richard K. Davidson, a former Union Pacific Corp. executive. They are the only two Chesapeake directors up for re-election at Friday's meeting.
The result of that vote may be meaningless since Chesapeake announced Monday it would replace four directors with new members selected by its two largest shareholders, Southeastern Asset Management and activist billionaire Carl Icahn. Chesapeake has not said specifically which directors will step down.
The new board will be in place by June 22, with a new independent chairman to replace McClendon. He will remain Chesapeake's CEO.
Garland said he is hopeful that the newly constructed board will be more responsive to shareholders.
Chesapeake Energy plans sale
of northern Michigan acreage
Chesapeake Energy Corp. has added its holdings in northern Michigan to the haul of assets it has on the auction block.
The cash-poor oil and natural gas company is selling about 450,000 net acres overlying two emerging resource plays with potential liquids-rich gas production, according to a prospectus from Meagher Energy Advisors.
It is the fourth set of Chesapeake assets being offered by the Denver-based company.
Chesapeake is looking to raise as much as $11.5 billion this year from asset sales and other transactions to fund its planned transition from a natural gas producer to one focused on oil and liquids.
Company officials intend to focus operation on areas where Chesapeake holds a leading acreage position.
The Michigan acreage is highly prospective so it doesn't fit with Chesapeake's current plans, according to the Meagher listing.