By Tess Stynes Chesapeake Energy Corp. (CHK) agreed to replace four members of its nine-member board with candidates proposed by the embattled company's two largest shareholders, Southeastern Management Co. and activist investor Carl C. Icahn. The move comes as the oil-and-gas company has been grappling with mounting debt, a string of corporate-governance controversies and low natural-gas prices. "We greatly appreciate the substantial contributions of all of our directors, but recognize our shareholders' desire for change," director Merrill A. "Pete" Miller said. Three of the new directors will be proposed by Southeastern, which has a 13.6% stake in Chesapeake. The fourth will be filled by Mr. Icahn--who has a 7.6% stake--or his designee. A fifth retiring director will be replaced by a new chairman, and the selection process is nearing completion. "I am fully supportive of these measures and remain focused on executing Chesapeake's strategy," Chief Executive and co-founder Aubrey K. McClendon said. Mr. McClendon will give up his position as chairman once a successor is appointed, but will remain a board member. A series of revelations detailing possible conflicts-of-interest issues involving Mr. McClendon have a brought wave of criticism against the company and its board. Chesapeake also faces a cash crunch and corporate-governance controversies that 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., to raise billions of dollars by selling some of its prized assets to fund its operations and repay loans. Shares were up 2.8% at $16.01 in recent premarket trading. Write to Tess Stynes at tess.stynes@dowjones.com
