Burns Hargis quits Chesapeake Energy board of directors
BY ROD WALTON World Staff Writer
Friday, March 08, 2013
3/08/13 at 7:14 AM
Oklahoma State University President Burns Hargis, caught up in Chesapeake Energy's financial crisis, has resigned from the company's board effective immediately, the oil and gas producer announced Thursday.
Chesapeake's board accepted Hargis' resignation and announced he will be replaced by Louis A. Raspino, a longtime oilman most recently CEO of Pride International until its 2011 merger with Ensco.
Hargis was appointed to the board of Oklahoma City-based Chesapeake Energy Corp. in September 2008. He offered to resign last summer after investors criticized him and others in the controversy surrounding company co-founder and CEO Aubrey McClendon. Four other directors stepped down, including former U.S. Sen. Don Nickles.
"Over the past several months, I have admired Burns' unselfish service on our board," said Archie Dunham, who stepped in as a non-executive chairman last summer.
"He has willingly invested his time, talents and expertise for the sole purpose of helping make Chesapeake successful," Dunham said. "We are grateful to Burns for remaining on the board to see several important assignments through to completion."
Chesapeake is selling off many assets to help erase a cash-flow deficit estimated at up to $4 billion this year, and McClendon recently resigned his CEO post effective April 1.
"With the completion of my final assignment, it is the appropriate time for me to step aside," Hargis said in a statement. "As I depart the board, I am confident in the future of Chesapeake because of its strong assets, experienced management team and dedicated employees."
The U.S. Securities and Exchange Commission is investigating McClendon's private investments in company-owned wells. Chesapeake stock has lost about 40 percent of its value in the past 14 months.
Hargis was considered an "independent" board member who did not work directly for the company, but he and other directors were criticized for refusing to rein in McClendon's borrowing and spending actions atop the Chesapeake ladder. The company cut non-executive board pay by 20 percent, from an average $533,000 to $350,000, in May 2012.
Bloomberg News and other media have reported that several of the independent board members, including Hargis, may have benefited from ties to the company.
Chesapeake gave more than $10 million to the OSU system, which Hargis has headed as university president since 2008. The company helped fund a new business school, a natural gas training center, an endowed faculty chair, student scholarships and tickets for sporting events, Bloomberg has reported.
Activist investor Carl Icahn and the biggest shareholder, Southwestern Asset Management, called for major changes to the board in 2012, including the replacement of McClendon's chairmanship with Dunham, the former Conoco Inc. and ConocoPhillips leader. Hargis stayed on the board to lead its audit committee and a review of company actions.
Last month, Chesapeake announced that the internal investigation found no wrongdoing by McClendon despite the CEO's borrowing of hundreds of millions of dollars from the company's biggest financiers.
The SEC, however, stepped up its own inquiry and has subpoenaed some company officials.
Original Print Headline: Hargis leaves board of oil firm
Rod Walton 918-581-8457