Chesapeake's Board Coming Under Scrutiny in Wake of CEO's Troubles

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From Bloomberg:
Chesapeake Energy Corp. (CHK)’s decision to cut directors’ pay and other perks may save the company up to $1.65 million a year without addressing investors’ concern that the board failed to rein in Chief Executive Officer Aubrey McClendon’s borrowing and spending spree.
The board’s history of close ties to McClendon, of being paid more than directors at similarly sized energy companies and of rewarding the CEO even as Chesapeake plunged in value may hinder its ability to oversee a turnaround of the company.
“They had an obligation to make themselves fully aware, to review and disclose these transactions,” said Michael Garland, executive director of governance for the New York City Comptroller, who controls pension funds that own 1.9 million Chesapeake shares and has proposed shareholders replace two of the board’s outside directors at the annual meeting next month. “The board has repeatedly failed to exercise independent oversight,” Garland said. Now, “They’re circling the wagons.”The company’s flip flop on how much it knew about a program it approved that allowed McClendon to acquire a 2.5 percent share in each of the company’s wells -- and amass more than $846 million in debt from companies and banks also doing business with Chesapeake -- has sparked demands from some investors for new directors.
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