Oklahoma City — Hours before its annual meeting is set to begin Friday morning,Chesapeake Energy’s board is facing the near-certain defeat of its two directors who are standing for reelection, plunging the beleaguered company into even greater uncertainty.
Burns Hargis and Richard Davidson, the only two of Chesapeake’s nine directors to stand for official reelection at the company’s annual meeting, have been resoundingly rejected by shareholders who cast their votes before the meeting, according to someone familiar with the matter.
Chesapeake’s annual meeting, at which hundreds of shareholders are expected, is set to begin at 10 a.m. local time in Oklahoma City. While a small sliver of the votes are expected to be cast during the meeting itself, even an overwhelmingly positive response from the shareholders voting at the meeting is unlikely to move the needle, this person added.
A defeat of Hargis and Davidson, the president of Oklahoma State University and former Chairman of the Board of Directors of Union Pacific, could mean that up to seven of the board’s nine directors are likely to be replaced.
Current CEO Aubrey McClendon and lead director Louis Simpson are expected to stay. And directors are reluctant to part with lead director Pete Miller, the CEO of National Oilwell Varco who is also on Chesapeake board’s audit committee.
As a result, every director except for McClendon, Simpson, and Miller is likely to step down, according to the person familiar with the matter and another person familiar with the board’s thinking, leaving room for a slate of six new board members.
The incoming group will include activist shareholder Carl Icahn or someone suggested by him, three directors suggested by shareholder Southeastern Asset Management, and a new chairman whom the board is now actively recruiting.
The new board is expected to be named no later than June 22.- Written by CNBC's Kate Kelly
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