Chesapeake Energy Corp.’s shareholders gave a modest thumb’s up Tuesday to the news that Carl Icahn is now the company’s third largest shareholder, and another large shareholder group urged a board shake-up to extract value.

At the close the company’s share price had gained 3.42% (54 cents) to end the day at $16.35, up from $15.81 on Friday.

Icahn late Friday disclosed in a Securities and Exchange Commission filing that his companies have purchased more than 50 million shares of Chesapeake for about $785.3 million and he now controls 7.6% of the company (see Shale Daily, May 29). In a letter to the board Icahn reprimanded management and noted a discussion he had with recent dinner partner CEO Aubrey McClendon.

“We believe that a management team and a business plan without strong oversight and accountability is doomed to fail,” Icahn said in his letter Friday. “Accordingly, at that dinner we asked Aubrey to consider direct shareholder representation on the board. The next day we were informed that the board refused to even consider this request prior to the selection of a chairman of their choosing.

“We believe that this response was completely disingenuous and illogical. Why is appointing a new chairman, sometime out in the future, an excuse for putting off considering whether to have shareholders, the true owners of the company, have immediate representation on this very flawed board in this very fluid situation?”

Having the current board of directors select the new chairman without shareholder approval or shareholder representation “is akin to asking the fox, who has plundered the hen house, to choose another fox to assist it in standing guard over the remaining hens,” he wrote. For “meaningful credibility among shareholders, corporate governance reforms cannot, in our view, be led by directors whose irresponsible actions have brought this company to the edge of the proverbial cliff.”

Icahn wants “at least” four of the current directors, other than Louis Simpson, immediately replaced by two people he designates and two people designated by another large shareholder, such as Southeastern Asset Management, the largest shareholder with 13.8%. Simpson, who joined the board last June, is the former CEO of Geico Corp., a subsidiary of Berkshire Hathaway Corp. Only two current board members are up for reelection at the annual board meeting on June 8: Richard Davidson and V. Burns Hargis.

Only when the changes are made “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 diverted from as it has in the past,” Icahn wrote.

“The board will carefully review Mr. Icahn’s letter,” Chesapeake management said. “The board’s immediate priority is to name an independent nonexecutive chairman and it is proceeding expeditiously toward that objective having consulted with shareholders. After an independent chairman is named the board’s nominating committee will consult with shareholders and carefully review Mr. Icahn’s request for board representation.”

On Tuesday State of New York Comptroller Thomas P. DiNapoli, who manages the New York State Common Retirement Fund, joined several other large shareholder groups and urged a “no” vote for for Hargis and Davidson. DiNapoli said in his letter that for several years he had engaged Chesapeake “on a number of issues, including board independence and executive compensation, but to no avail.” The “solution for Chesapeake,” he said, is “a board overhaul.”