Chesapeake Energy Corp. co-founder Aubrey McClendon was re-elected as chairman and CEO on Friday, despite a call for his ouster by an influential shareholder advisory firm.

McClendon received about 78% of the votes cast at this year’s annual meeting in Oklahoma City, which ensures that he will remain in the top job into 2014. Institutional Shareholder Services (ISS) had recommended that he be removed from the board, citing an executive compensation system that is not tied to performance standards.

“To be clear, that measure failed,” McClendon said after the preliminary tally was announced to the audience. He then took several minutes to explain that he understood the pain in not seeing Chesapeake’s share price growing.

The company, which he started 22 years ago, is worth about $35 billion today. However, at the end of 2010 the share price was $25.91, only three cents higher than 2009’s year-end price of $25.88.

“It’s been a real challenge for us in the last couple of years,” McClendon said. “Some people have been critical of the company’s performance, which is mainly a consequence of the headwinds seen in natural gas. There’s been a 75% decline in the price of natural gas in the last three years, and it’s taking us some time to convert the asset base to something oilier…”

Low gas prices have been “a real challenge to our company and to other companies in our sector. But we started with the highest percentage of natural gas in the sector…”

McClendon admitted that there had been “rough patches in the past” for the company and for himself. “Every company has those challenges. But we’ve met them face forward, honorably.” Taking a few minutes to discuss the “negativity” about Chesapeake, the CEO said he thought it wasn’t about the company but rather the price of natural gas.

“Unfortunately, today they [stock prices and gas prices] are still highly correlated. It’s going to be difficult for the stock price to break the correlation until we are able to increase our oil production in a more significant manner than we’ve done so far…We started two years ago [producing] 9% liquids and now we’re at 15%. We will continue to see it go up some…”

McClendon’s optimism for natural gas hasn’t faltered, however. He asked rhetorically whether it was time to “get bullish” because of the “negativity in that we’ve been very, very successful in finding gas.”

Gas operators have taken note, he said, first by moving to an oily production base.

Repeating something he said recently, the CEO assured shareholders that once producers transfer their rigs from gas fields to oil fields, “it will take substantially higher gas prices to get the rigs back. And it’s not going to be $5, $6 gas; it’s going to have to be quite a bit higher than that.”

McClendon again trumpeted his belief that exporting excess supplies of gas would “provide some relief to the marketplace.” In addition, he pointed to industrial growth, which continues to take a larger share of gas supplies.

“We are seeing the very beginning of an industrial renaissance,” McClendon told the audience. “Manufacturers are seeing growing volumes of natural gas and natural gas liquids and they are very excited about this…and some of the plays discovering new volumes are in the heart of the old American industrial belt.”

Natural gas still hasn’t achieved the success that McClendon and other promoters, like T. Boone Pickens, have wanted.

“I have failed in my effort to convince Congress and the president that we can begin to move out of this persistent energy crisis…which has been a big part of my adult life…But I’m not alone. Mr. Pickens would say he’s not been successful either.

“What are we working against? Inertia, a system that’s been in place over a 100 years. We have a liquids system in this country. We have 250 million cars and trucks running on gas [gasoline] or diesel. It will take $10 trillion to replace the costs and it would take a full-out effort of the auto factories to replace it.

“It’s going to take a long time to play out…All of the service stations are set up to serve gasoline and diesel…If we, Boone [Pickens] and myself, can get the country to embrace a natural gas-based transportation system, however, if we could take natural gas and turn it into a liquid, we wouldn’t have to change all of the infrastructure.”

If the country can “achieve a breakthrough in the next five to seven years, if we can have commercial quantities [of liquid natural gas] hit the marketplace, I say we will have a pathway away from foreign oil…”

Shareholders also voted to add Kathleen Eisbrenner, a liquefied natural gas (LNG) expert, to the board. She formerly was CEO of Excelerate Energy and headed the global LNG business for Shell Gas & Power International. Lou Simpson also was elected to the board.

Only 58% of those voting approved the company’s executive compensation plan, but they also voted overwhelmingly to review the plan annually. ISS had recommended that board member Don Nickles, a former Oklahoma senator, be ousted, but he received support from 79% of the those voting.

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