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Chesapeake Shareholders Reelect Board, Reject Declassification

Chesapeake Energy Corp. shareholders reelected the company's board of directors, but rejected separate proposals to implement proxy access, reincorporate in Delaware and declassify the board, the last of which would have made it easier to replace the entire board in one fell swoop.

According to preliminary results released by the Oklahoma City-based company on Friday, the declassification and proxy access proposals received 60% support at the annual shareholders meeting, short of the 66.7% required for passage. A third proposal to eliminate supermajority voting requirements also fell short with 60% support.

In a statement, Chesapeake said its board of directors will review the votes for all three proposals "and intends to seek feedback from shareholders before deciding on next steps."

The company said its eight board members -- Bob G. Alexander, Archie W. Dunham, Vincent J. Intrieri, R. Brad Martin, Merrill A. "Pete" Miller Jr., Frederic M. Poses, Louis A. Raspino and Thomas L. Ryan -- were reelected with an average of 96% support. Four were appointed last year by Southeastern Asset Management and Carl C. Icahn (see Shale Daily, June 22, 2012a).

Shareholders soundly rejected proposals to reincorporate in Delaware and to create a risk oversight committee, giving the proposals only 3% and 4% support, respectively. The former once enjoyed 53% support among shareholders looking to oust former CEO Aubrey McClendon (see Shale Daily, Jan. 9; June 18, 2012; June 11, 2012).

During the spring of 2012, the board wrested control of the company from McClendon and stripped him of his chairmanship (see Shale Daily, May 2, 2012). A month later, following "extensive discussions" with two of its largest shareholders, four board members were ousted (see Shale Daily, June 5, 2012). Dunham, a former chairman at ConocoPhillips, took the helm weeks later (see Shale Daily, June 22, 2012b).

Friday's annual meeting was the first without McClendon, the company's founder. Robert Lawler took over as CEO on Monday (see Shale Daily, May 21).

One of Lawler's first actions on Monday was to announce that the company had hired Patrick Craine, an attorney with the law firm Bracewell & Giuliani LLP, as Chief Compliance Officer. The addition of Craine, Lawler said, would "augment our company-wide compliance efforts. Our senior leadership team and board of directors are committed to further enhancing the effectiveness of our regulatory and legal compliance..."

Craine previously served as an enforcement attorney for the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), and was involved with the SEC's and FINRA's oil and gas task forces.

Last week Dunham said the United States could be just 10 years away from achieving energy independence, and said he was "bullish" on the company's future and supported its current board of directors (see Shale Daily, June 17).

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