Chesapeake Energy Corp. shareholders need more time and information before being asked to vote on three compensation issues and the re-election of two board members, according to a court filing by a half dozen shareholders.
About a dozen Chesapeake shareholders or groups have sued company co-founder Aubrey McClendon and other board members since an April 18 Reuters report about potential conflicts of interest raised by McClendon's borrowing from a private equity firm doing business with Chesapeake.
Attorneys for six of those shareholders have banded together to ask a federal judge in Oklahoma City to postpone Chesapeake's June 8 annual meeting until the company discloses more information about McClendon's loans.
“Absent court intervention, Chesapeake and its shareholders will suffer irreparable harm based on defendants' misconduct in the form of an uninformed shareholder vote,” the motion filed Tuesday states. “The proxy solicits shareholders to vote to re-elect two directors, defendants (Richard K.) Davidson and (Burns) Hargis. Plaintiffs are entitled to full and complete disclosure regarding what those directors knew about the transactions with McClendon and when they knew about them.
“Providing complete disclosure to the shareholders is the only way the shareholders are able to determine whether those directors are actually fulfilling their fiduciary duties to the company.”
U.S. District Judge Vicki Miles-LaGrange has not set a hearing on the request, her staff said Wednesday.
A Chesapeake spokesman said the company's annual meeting remains scheduled for June 8.
“We'll reserve comment for a more appropriate forum,” spokesman Jim Gipson said of the request.
The lawsuits contend Chesapeake's Founder Well Participation Program, which allows McClendon to buy a 2.5 percent stake in every company well, pose potential conflicts between McClendon's interests and the company's. One of McClendon's personal lenders, private equity firm EIG Global Energy Partners, also has done business with Chesapeake.
“Except for adding a sentence that the company is reviewing ‘the financing arrangements between Mr. McClendon (and the entities through which he participated in the FWPP) and any third party that has had or may have a relationship with the company in any capacity,' the proxy is silent regarding EIG and any other third parties' financial arrangements with McClendon, FWPP and the company,” according to Tuesday's filing. “In fact, EIG is never even mentioned in the proxy.”