--Chesapeake approves new chairman, five new directors
--New chairman has extensive M&A experience
--Moves may signal intent to sell company
(Adds analyst comment, other information.)
By Ben Lefebvre
Chesapeake Energy Corp. (CHK) on Thursday appointed Archie W.
Dunham, former chairman of ConocoPhillips (COP), as its new
independent chairman and named four new independent directors, the
result of a corporate governance shake-up called for by angry
investors.
The changes could also indicate plans to put large chunks or
even the entire beleaguered company up for sale, as the new board
members, advanced in age, are led by a former executive experienced
in the ways of oil-business transactions, analysts said.
Mr. Dunham, 73, will take over the chairmanship held until now
by Aubrey K. McClendon, a move long sought by investors who said
McClendon, who is also chief executive, held too much power in the
company. Mr. Dunham served as CEO of ConocoPhillips for six years
before stepping down in 2002 and has no previous ties to
Chesapeake. As CEO of Conoco, Dunham engineered the oil-and-gas
giant's spinoff of E.I. DuPont de Nemours & Co. (DD) in 1998,
the largest such move ever. In 2002, he helped orchestrate Conoco's
merger with Phillips Petroleum, a move that formed
ConocoPhillips.
Angry investors, led by Carl Icahn, who recently became
Chesapeake's second-largest shareholder, also pushed for replacing
half of the board. Shareholders had complained that the previous
board did little to rein in Mr. McClendon, who was often criticized
as running the business he co-founded more as a private concern
than as a public company.
A common thread running among many of the new board appointees
is their relatively advanced age, with one board member being in
his late-70s. The average board member age is now 65, up from 63
with the previous board. Morningstar analyst Mark Hanson said this
means they aren't planning for long tenures. "If that's not setting
up the company for sale, I don't know what is," Mr. Hanson
said.
Mr. McClendon and the board have faced tough scrutiny since it
emerged in April that Mr. McClendon has secured loans for more than
$1 billion from financial firms that do business with Chesapeake,
pledging his stakes in the company's wells as collateral.
Chesapeake, which produces more natural gas than any U.S. company
after Exxon Mobil Corp. (XOM), has been beset in recent months by
decade-low prices for its principal commodity and a string of
governance controversies.
Days before its June 8 annual meeting, the embattled natural-gas
giant agreed to shuffle its board and to let Mr. Icahn and
Southeastern Asset Management Inc. appoint four new members.
Southeastern, Chesapeake's largest holder with a 13.9% stake,
appointed three new members: former energy executive Bob G.
Alexander, former Saks Inc. (SKS) CEO R. Brad Martin and
chemical-company executive Frederic M. Poses.
Mr. Icahn, who owns 7.6% of Chesapeake, has appointed his own
agent, Vincent Intrieri, to the board. Intrieri is a senior
managing director of Icahn Capital LP and a director at Dynegy Inc.
(DYN) and CVR Energy Inc. (CVI), where Icahn holds significant and
controlling stakes, respectively.
The five new directors replace Richard K. Davidson, Kathleen M.
Eisbrenner, Frank Keating and Don Nickles, who have resigned, and
Charles T. Maxwell, who retired at the annual meeting.
Chesapeake shares were at $18.72 in recent trading, down 1.7%.
Shares are down 34% year over year.
--Saabira Chaudhuri and Ryan Dezember contributed to this
article.
Write to Ben Lefebvre at ben.lefebvre@dowjones.com.