Legislation proposed to change public company director elections in Oklahoma
Bills have been filed in the Oklahoma Legislature that would modify state laws on how public company directors would be elected. Director elections are among changes sought by Oklahoma City's Chesapeake Energy Corp. after a boardroom shake-up last summer.
The leader of Oklahoma's state Senate has filed a pair of bills that would modify the state's laws on public company directors, a change pursued by Chesapeake Energy Corp. as part of a pledge to change its corporate governance.
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Senate President Pro Tem Brian Bingman, R-Sapulpa, filed Senate Bill 248 and Senate Bill 594. The bills cover the same section of law, but one has an emergency clause, meaning the legislation goes into effect immediately as soon as it's signed into law.
Rep. Fred Jordan, R-Jenks, filed similar legislation in House Bill 1646.
The deadline to file bills was Jan. 17. The legislative session starts Feb. 4.
The bills strike a portion of the law Chesapeake successfully lobbied for in 2010 requiring the staggered election of public company directors. The Oklahoma City energy company asked the Legislature for that change following shareholder approval of proposals in 2008 and 2009 calling for the annual election of all directors.
In seeking the earlier law, Chesapeake said staggered board elections ensure stable management and leadership. Three other states — Indiana, Iowa and Massachusetts — also mandate staggered boards. Corporate governance experts say annually elected directors are typically more responsive to shareholders.
Shareholders approved a nonbinding resolution at Chesapeake's 2012 annual meeting to have the company reincorporate in Delaware so it would be easier to have annual director elections. The proposal, which received 53 percent of the votes, was opposed by the company's board. Institutional Shareholder Services, a shareholder advisory firm, recommended the proposal, saying it could have a positive impact on shareholder rights.
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