Is it Time for Chesapeake to Hand McClendon His Walking Papers?

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From Matt Koppenheffer at The Motley Fool:
In May, I wrote that Aubrey McClendon needed to be shown the door as Chesapeake Energy's (NYSE: CHK  ) CEO. Given the historical precedent of shareholders inexplicably supporting McClendon and his merry band of board members, I didn't think his departure was possible. Today, I'd be surprised if it didn't happen. 
A good deal has happened in two months. The most recent revelation -- that Chesapeake may have colluded with competitor Encana (NYSE: ECA  ) in land auctions -- wascovered by Brian Stoffel earlier this week. The accusation is no joke. Brian noted:
Colluding with a competitor to hold prices down for land would be in direct violation of the Sherman Antitrust Act and carry stiff penalties. Companies could be fined up to $100 million -- and individuals $1 million -- for each offense. Additionally, victims of the rigging can receive up to triple what they missed out on.
That follows a tsunami of other reports detailing questionable dealings by McClendon -- from borrowing more than $1 billion against personal Chesapeake well interests to running a commodity hedge fund while at the helm of the natural-gas producer. 
It's a laundry list of missteps that shareholders simply couldn't let slide, and as a result they've taken a hatchet to Chesapeake's board and governance practices. McClendon was stripped of his chairman title. Under pressure from the company's two largest shareholders --Southeastern Asset Management and Carl Icahn -- four directors were replaced by new directors named by Southeastern and Icahn. It was a massacre at the annual shareholders' meeting:
  • The two directors up for election, Burns Hargis and Richard Davidson, received 26% and 27%, respectively, of the votes cast. They both tendered their resignations.
  • Majority voting for directors was approved with 97% of the votes cast (replacing supermajority voting, which requires two-thirds of outstanding shares to vote for a change).
  • Approval of executive compensation was rejected with only 20% of the votes cast.
  • Approval of the annual incentive plan was rejected with only 31% of the votes cast.
  • Reincorporation in Delaware -- which would improve shareholders' rights -- was approved with 53% of votes cast.
  • Majority voting for all shareholder proposals -- again replacing supermajority voting -- was approved with 86% of the votes cast.
  • "Shareholder proxy access," which allows substantial, long-term shareholders to nominate directors for the company's board, was approved with 60% of the votes cast.
Clearly, shareholders were ready for a change.
Read the rest of the article here.

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