Chesapeake Energy Corp., the U.S. energy explorer battered by collapsing natural-gas prices and growing investor mistrust, will replace almost half its board under pressure from billionaire investor Carl Icahn.
Four of the company’s eight non-executive directors will be replaced with nominees of the largest shareholders, Southeastern Asset Management Inc. and Icahn, Chesapeake said in a statement today. Icahn triggered the overhaul by acquiring a 7.6 percent stake last month to rein in what he saw as Chairman and Chief Executive Officer Aubrey McClendon’s risk-taking and overspending that led to a $22 billion cash crunch and has eroded the share price by nearly 30 percent this year.
Chesapeake rose 2.3 percent to $15.94 at 10:29 a.m. in New York, the biggest gain among energy stocks in the Standard & Poor’s 500 Index.
Under an executive perk designed to align McClendon’s personal interests with those of the company, the CEO acquired stakes as large as 2.5 percent in almost every well Chesapeake drilled during the past 23 years. McClendon took out loans backed by his well stakes to fund his portion of costs. As of Dec. 31, he owed $846 million on those loans, the company reported on April 26.