NEW YORK, Tue May 29, 2012 – The head of New York’s state pension fund urged shareholders of Chesapeake Energy Corp. to withhold votes to re-elect two members of the natural gas producer’s board of directors.
In a letter issued on Tuesday, New York State Comptroller Thomas DiNapoli said withholding votes from board members V. Burns Hargis and Richard K. Davidson was a “necessary first step toward reconstituting a board that is currently entrenched and unaccountable to shareholders.”
On Friday, activist investor Carl Icahn revealed he had taken a 7.6 percent stake in Chesapeake and called on the company to replace at least four directors.
Icahn asked the company for two board seats for his own representatives and two for another large shareholder such as Chesapeake’s largest, Southeastern Asset Management.
DiNapoli said Hargis, who has been on the board since 2008, and Davidson, who has been on it since 2006, both serve on the audit committee, which has failed to monitor Chief Executive Aubrey McClendon’s mortgages on his stakes in company wells.
“In my view, there needs to be an evaluation of the entire board’s competence and performance, including an assessment of whether the current directors have the necessary skills and attributes to continue to oversee the company,” DiNapoli said in the letter.
Shares in Chesapeake were up 2.7 percent in premarket trading to $16.24.