The board of Chesapeake Energy has removed founder Aubrey McClendon as chairman – he remains chief executive – and scrapped highly unusual remuneration arrangements which led to his borrowing $846m.
Chesapeake also confirmed that the US securities and exchange commission (SEC) has started an 'informal' investigation into both the company and McLendon, with which it said they would all co-operate.
The company was an early beneficiary of shale drilling but the slump in the price of US natural gas has driven the business into a first quarter financial loss and halved its share price this year.
The second largest gas producer in the US has been forced to admit it may run out of money in 2013.
The Oklahoma-based energy firm did not say what the SEC review would focus on but there is widespread presumption that it involves executive perks under which McClendon was potentially rewarded with the company's own oil and gas. Chesapeake said it had been told to retain certain documents but also declared the investigation did not presume wrongdoing.
The board has also now scrapped the founder well participation programme, although not until mid-2014, 18 months before the end of its previously agreed term. 'McClendon will receive no compensation of any kind in connection with the early termination of the FWPP', the company said.
The well programme provides him with a contractual right to participate and invest as a working interest owner, with up to a 2.5% working interest, in new wells drilled on the company's leasehold land. It is thought he used his stake as collateral to borrow money to keep up with further investments as the company expanded.
McClendon has also been made to give up the chairmanship. Pete Miller, the company's lead independent director, said the separation of the chairman and chief executive roles would 'improve Chesapeake's corporate governance and the early termination of the FWPP will eliminate a source of controversy, both of which should send a positive signal to the market and improve shareholder value'.
McLendon said: 'This action reflects our determination to uphold strong corporate governance standards and will also enable me to focus my full time and attention on execution of the company's strategy, the implementation of our transformation into a major oil producer and the completion of our asset monetisation and joint venture objectives'.
The business grew on the back of shale gas discoveries using the fracking method of breaking up rocks with strong chemicals which has attracted the ire of environmentalists. The sudden access using this new technology to huge new gas reserves has sent the price of US gas spinning down to $2 a British thermal unit, the equivalent of $20 a barrel of oil at a time when the global price of oil is nearly $120.
On a conference call to Wall Street analysts earlier this week to explain the first quarter financial loss, McLendon said he was 'deeply sorry' for what he described as the distractions over his personal arrangements. The shares dropped 15% in one day alone, the biggest decline since the post-Lehman's energy price crash of 2008.
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