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Chesapeake Energy Corporation (NYSE:CHK) bowed to shareholders’ pressure to change its corporate governance, by replacing four of its board members, days before its annual general meeting.

Days before Chesapeake Energy Corporation (NYSE:CHK) holds its annual general meeting, the natural gas producer has bowed to pressure from shareholders to improve its corporate governance.

Of the four new board members, Carl Icahn, the billionaire investor, and his team will pick one board member, while Southeastern Asset Management, which is also the largest shareholder of Chesapeake will nominate the other three directors.

After Reuters reported that the CEO Aubrey McClendon had huge loans amounting to $1 billion which had been gained from personal collateral in various companies; investors and shareholders  put a lot of pressure for the management to change the way things are run at the second largest natural producer of gas in the USA.

The loans that McClendon got were extended to him by EIG Global Energy Partners, a management investment firm, which is also an investor in Chesapeake.

After the Reuters report, shares for the Oklahoma City-based firm dropped, with a number of investors asking that a full disclosure of the CEO’s financial interests and loans be declared.

However, it’s not known exactly who will step down from the board, although the CEO, Aubrey McClendon has agreed to drop the role of chairman, but will remain on the board of the embattled firm.

Southeastern Asset Management head Mason Hawkins opined that the changes that had been witnessed would bring in accountability, as well as increase supervisions for the gas producing giant.

Carl Icahn has been asking for change from Chesapeake Energy Corp, and was pleased with the new steps that had been taken. The investor billionaire holds 7.6% of the company, and said that it was great that issues that had been raised by investors and shareholders were finally being addressed.

The billionaire has been highly critical of the current board, and with this new development, he seems to have been appeased. However, he also added that he would discuss widely on the best replacement to the CEO position, so that investors do not get discouraged from the low valuation that Chesapeake Energy Corp currently has.

Moody’s Corporation (NYSE:MCO) recently warned that Chesapeake Energy needs to sell over $7 billion in assets so that it can avoid infracting a loan covenant. The rating agency also continued to say that with the sale, the gas firm would still have huge financial constraints in 2013.

The current chairman, Aubrey McClendon is currently focused on selling some of the assets that it has such as the stake that it has on West Texas Permian Basin, so that the $10 billion cash gap that it has this year can be closed. He has also not hinted at selling Chesapeake at all.

The drop in the prices of natural gas in over a decade has led to a sharp reduction in the spending that Chesapeake once enjoyed as one of the largest natural gas producer in the country.