Chesapeake Energy Corp., the U.S. energy explorer battered by collapsing natural-gas prices and growing investor mistrust, will replace four of the company's eight non-executive directors with nominees of the largest shareholders, Southeastern Asset Management and billionaire investor Carl Icahn.
Mr. Icahn triggered the overhaul by acquiring a 7.6% stake last month to rein in what he saw as Chairman and CEO Aubrey McClendon's risk-taking and overspending that led to a $22 billion cash crunch and has eroded the share price by nearly 30% this year.
Mr. McClendon has been under a cloud since a series of media reports in March and April about personal loans he obtained using minority stakes in company-owned wells that he'd been allowed to gather for his private portfolio. The company announced May 1 that he will step down as chairman when a replacement is chosen.
Southeastern's 13.6% stake in Chesapeake makes it the largest holder, followed by Mr. Icahn. Southeastern will propose three of the new directors and Icahn will name the fourth, the company said Monday.
The new directors and chairman will be announced no later than June 22, the company said Monday. Mr. McClendon will remain a director and CEO after a new chairman is named.
The company didn't name the four directors that will resign. A fifth independent director, Charles Maxwell, is scheduled to retire after reaching the board's mandatory retirement age of 80. Louis Simpson, a former Warren Buffett protege who joined the board a year ago, will remain a director, the company said.
If shareholders at the company's June 8 annual meeting adopt a majority-voting standard for directors, the rule will be immediately applied to that day's results, the company said. The company also will seek an exemption from a 2010 Oklahoma law, for which Chesapeake lobbied, that requires staggered terms for some corporate boards. The company said it will seek permission for holders to vote on the entire board in 2013.