Shareholders withhold support to Chesapeake Energy directors seeking election

Shareholders sent an angry message to the board and management of Chesapeake Energy yesterday, as they withheld support for the two directors seeking election, rejected the pay plan for top executives and urged that the company allow major shareholders to nominate their own board candidates.

With the revolt by shareholders, which occurred even as Chesapeake's board took steps to placate them, pressure to revamp the leadership at the company is mounting.

The target of shareholder ire is the company co-founder and chief executive, Aubrey K. McClendon.

Chesapeake which is facing an acute cash squeeze, announced just hours before the meeting that it was selling pipelines to raise $4 billion in its bid to quickly repay a high-interest $4 billion emergency loan it recently secured from Goldman Sachs and the Jeffries Group.

Although Chesapeake shares gained with the news, the company was still trying to address the deeper issues affecting the performance of the company. The company's stock is down around 40 per cent over the last year due to mounting debts and plummeting natural gas prices.

The ''no'' vote on the two directors seeking election at the annual shareholder meeting in Oklahoma City came as expected, following  the board agreeing earlier in the week to replace four of its nine members with appointees chosen by two outside investors, Carl C  Icahn and Southeastern Asset Management. Both investors have been critical of McClendon's oversight of the company. The company will also name a new independent chairman.