Chesapeake Energy board story updated to reflect analyst comments, additional data and closing share prices NEW YORK ( TheStreet) -- Chesapeake Energy ( CHK) has settled a campaign raised by activist investor Carl Icahn to give shareholders of the struggling oil and gas company four board seats. It's a significant win for Icahn, but Chesapeake Energy still faces a crucial task of selling billions in oil and gas assets amid slumping commodity prices to meet a projected a second half cash shortfall. The company said that following "extensive discussions" with its two largest shareholders, Southeastern Asset Management and Icahn, it has agreed to add four new independent directors to replace four existing independent directors who will resign from Chesapeake's board. Three of the new independent directors will be proposed by Southeastern and the fourth will be proposed by Icahn. In his recent letter to Chesapeake after revealing a stake in the company, Icahn asked for the right to appoint two board members and for two board seats to be given to Southeastern. Chesapeake is continuing its search for a non-executive chairman -- who will also serve as a fifth independent director, after co-founder and CEO Aubrey McClendon agreed to relinquish his chairman role earlier this year amid concerns of potential conflicts in his stewardship of the company. In a Monday statement, Chesapeake Energy said that the new board composition will be announced by June 22, and reaffirmed that McClendon will remain the company's CEO. For Carl Icahn, who announced a 7.6% share stake in Chesapeake in late May, the move is a quick answer to his activist calls for more independence on the company's board as it works to sell assets to meet a near $10 billion funding gap in 2012, amid decade-low natural gas prices. In a scathing May letter to Chesapeake's board of directors, Icahn called for the nomination of four shareholder appointed directors as a first cause of action to improve the struggling gas giant's waning finances and share prices. "
The stock price suffers because of the enormous risk associated with an ever changing business strategy, enormous capital funding gap, poor governance, and unchecked risk taking," Icahn wrote in late May letter to Chesapeake's board, adding, " What is important is that this pernicious funding gap, which we believe this board has created, must be filled." Chesapeake Energy did not say which board members will resign in a press release. The board includes former U.S. senator Don Nickles, Frank Keating -- who has headed national banking and insurance industry lobbies, as well as served in the House of Representatives and several Republican White House administrations, and Pete Miller, the CEO of National Oilwell Varco. For Chesapeake's annual meeting scheduled for June 8, several large pension funds had already submitted proposals for shareholder representation on the board, and the New York City comptroller had specifically asked for the removal of Oklahoma State University President Burns Hargis and former Union Pacific Corp. Chairman Richard K. Davidson as directors.