Chesapeake CEO McClendon To Give Up Chairman Position

Chesapeake Energy announced this morning that Aubrey McClendon will be replaced as Chairman of the company's Board of Directors by a non-executive chairman. McClendon, one of the Chesapeake's co-founders, will stay on as Chief Executive Officer.

The company also announced that the Board and McClendon had reached an agreement on the early termination of the controversial Founder Well Participation Program, under which McClendon is allowed to stake up to a 2.5 percent interest in every well that Chesapeake drills. A news release states that the FWPP will be discontinued June 30, 2014, eighteen months before it is scheduled to expire, and that McClendon will receive "no compensation of any kind in connection with the early termination of the FWPP."

McClendon and the Board have come under fire in recent weeks after it was disclosed that, in order to help fund his participation in the well program, McClendon had taken out more than $1 billion in personal loans from entities that were also negotiating to do business with Chesapeake. The Board announced it would be reviewing these financing arrangements, and both the SEC and the IRS have launched inquiries into the matter.

The decision by the Board of Directors to bring in an "independent," non-executive chairman comes as critics have attacked the company for poor corporate governance. According to the release, the Board's Nominating and Corporate Governance Committee will be looking at candidates with "no previous substantive relationship with Chesapeake and will be soliciting input from major shareholders."

In a statement included with the company release, officials with Southeastern Asset Management, Chesapeake's largest shareholder, said, "We are pleased that the Board has listened to our input and believe it has made the right decision by ending the FWPP early and seeking an independent Chairman."

CEO McClendon also expressed his complete support for the changes.

In early trading this morning, Chesapeake stock was up more than five percent. The company releases its first quarter earnings later today.