Chesapeake Energy shareholders have a new set of directors. They might also have a new set of governance problems.

In a June 27th Form 8-K, Chesapeake announced the resignations of directors Richard Davidson—who did not receive support from a majority of shareholders at the annual meeting held in June—and Frank Keating, Don Nickles and Kathleen Eisbrenner—each of whom departed following an agreement between the company and its two largest shareholders, Southeastern Asset Management and Carl Icahn.

Pursuant to this agreement, the company named Archie Dunham, Bob Alexander, Vincent Intrieri, R. Brad Martin and Frederic Poses to the board. Dunham—who is the former CEO of Conoco—was selected by Chesapeake to be the independent chairman following input from Southeastern and Icahn. Southeastern’s nominees were Alexander, Martin and Poses; Icahn picked Intrieri, who is a senior managing director of Icahn’s investment firm and has served on several public company boards at the behest of Icahn. Alexander serves on the board of CVR Energy, where Icahn is chairman and holds a controlling stake.

Davidson was joined by director V. Burns Hargis in failing to receive majority support at the annual meeting. (Due to the board’s staggered terms, only Davidson and Hargis were up for election at the meeting.) Like Davidson, and in accordance with Chesapeake’s new majority voting policy, Hargis tendered his resignation after the vote.

However, the board did not accept Hargis’ resignation due to his role in leading an ongoing investigation of McClendon’s personal borrowings from several of the company’s creditors. These loans were made possible by a compensation program that allowed McClendon (but no other employee) to invest in company-owned wells. In April 2012, Reuters reported that McClendon had used his interests in these company assets as collateral for more than $1.0 billion in personal loans.

Hargis is President of Oklahoma State University, which received at least $2.0 million in commitments and donations from Chesapeake in 2011.

The June 27th filing suggests Southeastern and Icahn supported Hargis’ continued presence on the board. The filing also states that Hargis is not expected to remain chairman of the audit committee, and that upon completion of the investigation his resignation will be reconsidered. Chesapeake hasn’t said when the board will finish the internal inquiry.

In the midst of this turnover, Chesapeake formed new indemnity agreements with each existing director and senior executive, as well as the directors that resigned. These agreements will indemnify the directors for obligations they might incur in more than a dozen lawsuits that have been filed in recent months against the board regarding the above matters.

On August 3, the company disclosed the committee assignments for its directors. The audit committee—which, in addition to performing the McClendon investigation, is responsible for oversight of the company’s legal compliance and financial disclosures—will continue to be chaired by Mr. Hargis and will include Martin and Miller. Because the NYSE requires that audit committees contain three directors, the committee’s current three-person membership (including Hargis) suggests that the board sees no need to plan for Hargis’ departure at this time.

The compensation committee, which evaluates McClendon’s performance and sets his pay, will be chaired by Miller and will include Alexander and Martin. Miller is CEO of oilfield service provider National Oilwell Varco, which received about 1% of its 2011 gross revenues from Chesapeake. Miller has received pay packages from National Oilwell Varco averaging $9 million in each of the last three years. He also recommended the lawyer hired by the audit committee for the McClendon investigation.

The nominating and corporate governance committee—which evaluates the board’s membership and the company’s governance practices—is chaired by Louis Simpson, who is joined by Dunham, Intrieri and Poses. Southeastern proposed Simpson for the board in 2011.

To sum up:

  • Of the board’s nine current directors, five were proposed by Southeastern Asset Management or Icahn, who together own about 20% of the outstanding shares;
  • The committee responsible for McClendon’s pay is led by a fellow Fortune 500 CEO (Miller) who relies on Chesapeake for 1% of his firm’s annual revenues; and
  • The committee responsible for investigating McClendon’s personal loans is led by a director (Hargis) who couldn’t get majority support from shareholders and whose employer counts Chesapeake as one of its largest donors.

While the market has cheered Chesapeake’s planned asset sales, it should not discount the reemergence of governance concerns similar to those that weighed on the share price in May. In addition to the audit committee investigation, an SEC investigation of McClendon is ongoing. And in June, reports of price fixing by Chesapeake and Canadian energy producer Encana caused some fearful investors to sell. Updates from the company on these issues may appear in its forthcoming Form 10-Q, which should be filed before next week.

Moreover, it is unlikely that the shareholder discontent voiced at the annual meeting was meant to be an endorsement of the level of board control that has been taken by Southeastern and Icahn. (Icahn usually has to wage a successful proxy contest before he has similar representation on a board.) The other non-management shareholders, who account for about 78% of the outstanding float, will have their first chance to weigh in on the new board at the 2013 annual meeting, when for the first time all Chesapeake directors will stand for election.