Chesapeake Energy Corporation (NYSE:CHK) announced today that its board of directors accepted the resignation of V. Burns Hargis, chair of the audit committee after completing his task in leading the company’s investigation on the finances of its CEO Aubrey McClendon.
Hargis joined the board of the second largest oil and natural gas producer in the United States in 2008. Commenting on his decision to step down from his position in the company, Hargis said, "With the completion of my final assignment, it is the appropriate time for me to step aside."
On the other hand, Chesapeake Energy Corporation (NYSE:CHK) chairman, Archie Dunham said, “Over the past several months, I have admired Burns’ unselfish service on our board. He has willingly invested his time, talents and expertise for the sole purpose of helping make Chesapeake successful. We are grateful to Burns for remaining on the board to see several important assignments through to completion. He led the audit committee and the recent review with the utmost professionalism and integrity. During this same period, he also contributed to strengthening Chesapeake’s corporate governance. We wish him only the very best as he continues to lead Oklahoma State University.”
Last month, Chesapeake Energy Corporation (NYSE:CHK) revealed that its internal probe found that McClendon did not commit any intentional wrongdoing or improper conduct in his capacity as chief executive officer in connection with the loans he obtained from EIG Global Energy partners and from his other affiliates. McClendon borrowed $1.4 billion from the private equity firm and he used the funds to acquire stakes in each of the wells drilled by the Chesapeake Energy, a perk provided by the company for him known as the Founder Well Participation Program (FWPP).
The largest shareholders of Chesapeake Energy Corporation (NYSE:CHK), Mason Hawkins of South Eastern Asset Management and Carl Icahn fought against the FWPP. McClendon agreed to end the FWPP 18 month earlier and step down as chairman of the company.
Chesapeake Energy Corporation (NYSE:CHK)'s internal probe also found that the company did not violate antitrust laws related to the purchase of oil and gas rights in Michigan in 2010.
Last week, the company revealed in a regulatory filing that the Securities and Exchange Commission (SEC) is investigating the controversial perks of Chesapeake’s CEO. The on-going investigation of the agency came nine days after the company revealed the results of its own internal inquiry regarding the issue.
Chesapeake Energy Corporation (NYSE:CHK) also announced that Louis Rapino has been appointed to replace Hargis as chair of the audit committee. Before joining the company, he serves as CEO of Pride International Inc until 2011. Raspino will stand for election during the upcoming shareholders annual meeting in June.