Archie W. Dunham, 73, the former chairman of ConocoPhillips, was tapped Thursday as Chesapeake Energy Corp.'s independent nonexecutive chairman. Dunham, who also was CEO of predecessor Conoco Inc., has had "no previous relationship" with the company, the board said.
Aubrey McClendon, who founded the company 23 years ago and has held the role of chairman since then, is to continue to serve as CEO and as president and would continue to serve on the board.
"Under Aubrey's leadership, Chesapeake has built an extraordinary portfolio of natural gas and oil assets in creating one of the world's leading energy companies," said Dunham. "As I evaluated this opportunity, I was attracted by the clear mandate to provide strong oversight while working closely with the company's exceptional management team, talented employees and reconstituted board in a situation where we have the opportunity to create substantial value for all shareholders in the years ahead."
Dunham, who worked for ConocoPhillips and its predecessor companies for more than 40 years, was elected president and CEO of Conoco Inc. in 1996 and served as chairman from 1999-2002. He was elected chairman of ConocoPhillips in 2002 and held that post until his retirement in 2004. He was considered instrumental in orchestrating Conoco's initial public offering that separated the company from DuPont in 1998, which at the time was the largest in U.S. history, as well as in negotiating the merger of Conoco and Phillips Petroleum Co. in 2002.
Four new faces also were appointed to the board as independent directors, with three chosen by Southeastern Asset Management, Chesapeake's largest shareholder (13.9%), and one by Carl C. Icahn (7.6%). Southeastern's appointees are Bob G. Alexander, R. Brad Martin and Frederic M. Poses. Icahn appointed Vincent J. Intrieri, a close associate.
Alexander, 78, is the founder of Alexander Energy Corp., which was sold to National Energy Group (NEG) in 1996. He served as chairman and CEO of NEG from 1998 until its sale in 2006 to SandRidge Energy. Tom Ward, who is chairman and CEO of SandRidge, co-founded Chesapeake with McClendon.
Martin, 60, is the former chairman and CEO of Saks Inc., positions he held from 1989 to 2007. He now serves on the boards of FedEx Corp., First Horizon National Corp. and Dillard's Inc. Poses, 69, is CEO of privately held Ascend Performance Materials. From 1999 until its acquisition by Ingersoll Rand in 2008 Poses was chairman and CEO of Trane Inc. He is nonexecutive chairman of TE Connectivity Ltd. and is a director at Raytheon Co.
Intrieri, 55, who has worked for Icahn-related entities since 1998, has served as senior managing director of Icahn Capital LP, the entity that manages the various investment funds, since 2008. He is currently the chairman of CVR Energy Inc., and also serves on the boards of Federal-Mogul Corp. and Dynegy Inc.
"Chesapeake has the assets and the opportunity to become the U.S.'s preeminent, low-cost energy producer and to significantly grow its value per share," said Southeastern CEO O. Mason Hawkins. "We believe this board will prudently guide, assist and complement management's efforts to capture its potential."
Dunham and the four new directors replace Richard K. Davidson, Kathleen M. Eisbrenner, Frank Keating and Don Nickles, who have resigned from the board, as well as Charles T. Maxwell, who retired at the annual meeting earlier this month (see Shale Daily, June 11).
Davidson and board member V. Burns Hargis submitted their resignations when they did not receive support of a majority of the shares voted. The board accepted Davidson's resignation at the time, but Hargis is chairman of the board's audit committee and "reflecting input" from Southeastern and Icahn, the board declined to accept the resignation until a review of McClendon's financing arrangements are completed.
Hargis is to continue to lead the review but is not to remain chairman of the audit committee. Once the review is completed the board plans to "revisit his resignation."
Board member Louis A. Simpson, who was proposed by Southeastern in 2011, would become chair of the nominating and governance committee. Pete Miller also would continue on the board as chair of the compensation committee; the lead independent director role in which he had served has been eliminated.
Final board committee assignments are to be made by the new members, Chesapeake said. It also is to take the "necessary actions to enable shareholders to elect the entire board of directors at the 2013 annual meeting of shareholders."
"We believe Chesapeake is now heading in the right direction," said Icahn. "With the board providing strong oversight, the management team will be sharply focused on realizing the value of its assets and the company will be well positioned to create substantial value for shareholders going forward."