The concerns surrounding the corporate governance practices at Chesapeake Energy Corporation (NYSE:CHK) continue to dog the company’s Board as the New York State Pension Plan’s Comptroller has called for shareholders to withhold their votes for the proposed slate of directors.
New York State Comptroller Thomas DiNapoli suggested the action in a letter issued Tuesday, urging shareholders to withhold votes for Burns Hargis and Richard Davidson as a “necessary first step toward reconstituting a board that is currently entrenched and unaccountable to shareholders.”
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We previously published a story on a number of questionable governance practices at Chesapeake and its Board of Directors. This included director involvement in loans to Chesapeake Chief Executive Aubrey McClendon, questionable donations to related non-profit institutions and the firm hiring the children of director Frank Keating in highly lucrative positions. Chesapeake also did $343 million in business with National-Oilwell Varco, Inc. (NYSE:NOV), a drilling equipment manufacturer that is headed by Chesapeake director Merrill “Pete” Miller.
Concerns at Chesapeake extended beyond just the behavior of the board members however, and questions have been raised about whether the board has provided sufficient oversight of McClendon’s activities. McClendon has acquired a personal stake of 2.5 percent in the company’s producing wells, and has amassed significant debt against these assets, primarily borrowing from Chesapeake lenders and business partners. Many investors are furious that these activities were allowed to take place under the watch of the current board, and this is driving the calls for certain directors to be ousted.
This news of the NY state pension plan action comes on the back of activist investor Carl Ichan taking a 7.6 percent stake in the natural gas exploration and production company, and had demanded two seats for his own representatives. Ichan is well known for his initiatives to clean up corporate boards and set firms back on the path to profitability.