Huzzah! Change Comes to Chesapeake Energy

You've got to hand it to Carl Icahn -- he knows how to make things happen.

On May 25, Icahn filed SEC paperwork disclosing the fact that he'd bought a 7.6% position in Chesapeake Energy (NYS: CHK) and in less than two weeks he's gotten the natural gas giant's board to crack. And given the track record of Chesapeake's board, that's no small matter.

Credit is also due to Mason Hawkins and Southeastern Asset Management. As Chesapeake's largest shareholder with a 13.6% stake, Southeastern recently filed paperwork to allow it to become an activist investor. While Hawkins and Southeastern may not have been as publicly vocal as Icahn, I don't doubt that they played a big role behind the scenes.

In a press release Monday, Chesapeake announced that four of its board members will be resigning and they'll be replaced by four independent directors -- one that will either be Icahn or somebody appointed by him and three that will be recommended by Southeastern.

In the same press release, Chesapeake blinked on two other issues that investors have been clamoring about. First, it said that if shareholders approve the initiative for majority voting, it will "immediately" implement the change and apply majority voting to the 2012 annual meeting voting results. In addition, Chesapeake will attempt to "seek relief" from Oklahoma's mandated classified board structure -- a requirement Chesapeake pushed for.

From a good-governance perspective, these are all steps in the right direction for Chesapeake. And for current shareholders, these changes could spell relief if they encourage the market to pull the focus off of CEO Aubrey McClendon's missteps and the company's iffy governance, and put it back on Chesapeake's asset base.

But does this make everything all right for Chesapeake? Let's not get ahead of ourselves here. It's been a long time that McClendon has had his way with the company and its soft-touch oversight and Reuters has managed to unearth some pretty frightening skeletons. While the steps taken Monday definitely make me more bullish on Chesapeake than I was just a few days ago, I'm not convinced the company is in the clear quite yet.

If you want to keep up to date on the Chesapeake drama, be sure to add the stock to your watchlist.

At the time thisarticle was published The Motley Fool owns shares of Chesapeake Energy. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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