DOW JONES NEWSWIRES The New York State comptroller's office urged fellow shareholders of Chesapeake Energy Corp. (CHK) to withdraw support from two board members, joining a growing call for a board shake-up at the embattled gas company. Shares of the company were up 6.3% to $16.81 in recent trading. The stock has plummeted 46% in the past twelve months. As trustee of the New York State Common Retirement Fund, which owned about 3.5 million shares of Chesapeake as of May 18, New York State Comptroller Thomas P. DiNapoli called on investors to withhold their votes for V. Burns Hargis and Richard K. Davidson at an upcoming annual shareholders meeting. "A fundamental restructuring of the company's board of directors is essential if the board is to regain the trust of stakeholders and regulators," DiNapoli wrote in a letter to shareholders. The board should "protect the long-term interests of the company instead of promoting parochial interests of maintaining incumbent control," he said. A series of revelations detailing possible conflicts-of-interest issues involving Chesapeake Chief Executive Aubrey McClendon has a brought fresh wave of criticism against the company and its board. Activist investor Carl Icahn recently reported a 7.6% stake in the company, and called for the replacement of at least four of the company's board members. The company has said it would "carefully review" his request. California Public Employees' Retirement System has also pushed for governance changes at the company, focusing on plurality voting requirements. Chesapeake faces a cash crunch, which along with corporate-governance controversies have pushed its stock to the lowest level since 2009. Pressure is mounting on Chesapeake, the nation's second-largest natural-gas producer after Exxon Mobil Corp. (XOM), to raise billions of dollars by selling some of its prized assets to fund its operations and repay loans. In his letter, DiNapoli cited the company's plummeting share value and its debt in calling for a board overhaul, including an evaluation of other board members' competence and performance. -By Kristin Jones; Dow Jones Newswires; 212-416-2208; kristin.jones@dowjones.com
