Although Chesapeake Energy CEO Aubrey McClendon is about to lose his title as Chairman of the Board, it seems that’s about the only thing he’s losing—the title. The power of the position—the ability to call board meetings and the power to call special shareholder meetings—he’s going to keep. The existing board of directors made a change to its bylaws last Friday to grant McClendon the right to call meetings.
Those critical of Chesapeake’s management take it to mean that nothing is really changing with respect to board oversight of McClendon.
Chesapeake Energy Corp’s board of directors, despite being taken to task by investors for lax oversight of Chief Executive Aubrey McClendon, has changed the company’s bylaws to allow the executive to keep powers he had as chairman.
McClendon, who co-founded Chesapeake, will lose his title as chairman by June 22 after the board and the company’s biggest shareholders approve an independent chairman to replace him. That action was taken after Reuters reported that McClendon arranged for more than $1 billion in financing using his stake in thousands of company wells as collateral.
McClendon’s personal lender is also a large source of financing for Chesapeake, a situation that may put the executive’s interests ahead of shareholders, analysts and academics have said.
Following the board’s move, taken after the annual shareholders’ meeting on Friday, McClendon and the still-unnamed chairman each hold the power to call special meetings of shareholders and the board of directors. The Chesapeake board revealed the change in a filing with the U.S. Securities and Exchange Commission made on Friday.
"I guess that is sensible to give the CEO the right to call a board meeting as well as the chairman," said Paul Hodgson, senior researcher at governance firm GMI Ratings. "But I don’t understand why the CEO, who is management, should have the right to call a special meeting of shareholders."
A board chairman, said Hodgson, is the ultimate representative for shareholders, and it is the responsibility of the chairman, not the CEO, to call a special shareholder meeting.*
*Reuters (Jun 12, 2012) – Chesapeake CEO losing a title, but keeping powers