By NATHALIE TADENA
Chesapeake Energy Corp. said founder and CEO Aubrey McClendon
will leave the company on April 1, ending a 24-year run as the
oil-and-natural-gas driller's leader.
Mr. McClendon, whose personal financial dealings with
Chesapeake have come under scrutiny, will step down even though
Chesapeake said its review of alleged conflicts of interest
involving Mr. McClendon had found no improper conduct.
Chesapeake chairman Archie Dunham said in a statement the
company needs a new leader to help develop the oil and gas
assets the company has amassed under Mr. McClendon.
The 53-year-old has been the company's CEO since its
inception in 1989 and was chairman until 2012. He will resign
from the board when his successor is appointed and will receive
his full compensation and other benefits to which he is
entitled under the terms of his employment agreement,
"While I have certain philosophical differences with the new
board, I look forward to working collaboratively with the
company and the board," Mr. McClendon said in a statement.
Investors in the nation's second-biggest natural-gas
producer by volume after ExxonMobil have been pressing for
changes at the company, which has been criticized for heavy
spending and extravagant compensation for executives and
Chesapeake has already made significant corporate changes.
In June it replaced a majority of its board with directors
proposed by its largest shareholders, Southeastern Asset
Management Inc. and activist investor Carl Icahn.
Mr. Icahn, who amassed a nearly 9% stake in the Oklahoma
City company and called for Mr. McClendon to be replaced as
chairman, said on Tuesday: "I am confident that history will
prove that Aubrey has been correct about the value of natural
gas in general and the value of Chesapeake in particular."
If Chesapeake directors hold strictly to the terms of Mr.
McClendon's employment contract, the longtime CEO could have to
pay the company some of a $75 million award, made in 2008, on
his way out the door.
According to Chesapeake's May 2012 proxy statement, Mr.
McClendon must repay the company a portion of the award if he
leaves before Dec. 31, 2013. The repayment is on a sliding
scale; because he is retiring April 1, Mr. McClendon would have
to pay $11.25 million, according to the terms listed in the
Mr. McClendon isn't entitled to cash severance or
accelerated vesting of restricted stock. As of Dec. 31, 2011,
Mr. McClendon held roughly 1.5 shares of restricted stock, then
valued at $33.5 million.
Mr. McClendon also is entitled to deferred compensation,
which was valued at $7.2 million at the end of 2011, according
to the proxy.
The company has retained recruiters Heidrick & Struggles
International Inc. to assist in its search for a new CEO and
said it would consult with Mr. McClendon in connection with the
Chesapeake said it would release its final report regarding
financing arrangements between Mr. McClendon and any third
party that has had a relationship with the company on Feb. 21.
Mr. McClendon's decision to leave isn't related to the board's
pending review of his financing arrangements and other matters,
The probe began in April, after it was revealed that
entities controlled by Mr. McClendon had borrowed up to $1.4
billion from private-equity firm EIG Global Energy Partners
LLC, which has paid hundreds of millions of dollars for
preferred shares in Chesapeake subsidiaries. Some
corporate-governance experts said there was the potential for a
conflict of interest.
Mr. McClendon borrowed the money largely to pay for his
share of the drilling costs for wells in which he owns a small
interest-- investments he acquired through a perk that allowed
him to take a small stake in every well Chesapeake drilled.
"As the company moves toward more fully developing the value
of its outstanding assets, Chesapeake is at an important
transition in its history and Aubrey and the board of directors
have agreed that the time has come for the company to select a
new leader," Mr. Dunham said.
Dow Jones Newswires