Chesapeake Energy Corp. CEO Aubrey McClendon and National Oilwell Varco CEO Pete Miller, the lead independent director of the board, late Tuesday sent a letter to shareholders addressing"certain issues" raised last week by John Liu, the City of New York's comptroller, who oversees the city's pension funds.
The group of pension funds, which own less than 0.25% of Chesapeake stock, urged shareholders to vote against the two board members up for reelection in June because of corporate governance issues (see Shale Daily, May 21). The annual meeting is set for June 8.
"While the board of directors appreciates constructive input from our shareholders, we wish to address issues raised by Mr. Liu and reiterate important steps" taken ahead of the annual meeting, the letter from McClendon and Miller stated.
The letter then went on to note recent actions that have been undertaken to address concerns, including decisions to reduce directors' annual compensation, eliminating the use of aircraft for personal use by outside directors, reducing McClendon's total compensation by 15%, and toppling McClendon from the chairmanship position.
The letter further noted that the board had taken "swift action" to end McClendon's sole participation in the Founder Well Participation Program, and it noted that the company "continues to make important progress to unlock the substantial value of its assets," with assets for sale valued at $9.5-11.0 billion. "We have already completed $2.6 billion in asset sales to date in 2012."
McClendon and Miller also took a stand to support Richard K. Davidson and V. Burns Hargis, the two directors up for reelection to the board, calling them "strong, highly qualified independent directors" who "warrant shareholder support."