Activist investor Carl Icahn reported a 7.6% stake in Chesapeake Energy Corp. (CHK) and called for the replacement of at least four of the embattled natural gas company's current board members.
Icahn, who first took a stake in Chesapeake in late 2010, said the company's board failed to hold management accountable. Though Icahn said company's recent decisions separate the chairman and chief executive roles are a step in the right direction, the manner in which the company plans to select a new chairman is "woefully inadequate in both process and substance."
Icahn called for at least four of the board's current members, other than Louis Simpson, be immediately replaced by two individuals designated by Icahn and two individuals designated by another large shareholder.
"Only when these changes are effectuated will the board be truly independent and more importantly will investors come to believe that promises made will be promises kept; when a capital plan is agreed upon it will be maintained, not diverged from as it has in the past," Icahn wrote in a letter to the board.
The Wall Street Journal reported last week that Chesapeake expected Icahn to disclose soon that he has taken a significant stake in the company, citing people familiar with the matter.
A series of revelations detailing possible conflicts-of-interest issues involving Chesapeake Chief Executive Aubrey McClendon has a brought fresh wave of criticism against the company and its board.
Chesapeake also faces a cash crunch and corporate-governance controversies that have pushed its stock to the lowest level since 2009. Pressure is mounting on Chesapeake, the nation's second-largest natural-gas producer after Exxon Mobil Corp., to raise billions of dollars by selling some of its prized assets to fund its operations and repay loans.
Shares were up 1.4% to $16.03 in recent after hours trading. The stock is off 49% over the past 12 months.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; email@example.com