Carl Icahn Wins! What About Shareholders? Chesapeake Energy Corporation (CHK)

While it saw initial success, the tech bust in 2000 took a big toll on the company’s stock price. It has languished well below its highs of over $100 per share since that time. Its business, meanwhile, has similarly struggled, leading to the replacement of Jerry Yang as CEO in early 2009. There have been a succession of high profile CEO flops since that time and it’s too soon to tell if the most recent boss, Marissa Mayer, brought in to much fanfare from Google, can turn things around. Luckily a prescient investment in China’s Alibaba has presented the company with a financial windfall that should give it plenty of time to work on righting the ship.

A Lot of Work
Turning things around at Chesapeake is no small task. Indeed, McClendon leaves a company in transition. With a large debt load, the company has been selling assets to pay down its obligations. More asset sales are on the way, too, which will require a great deal of attention from the new CEO. Such sales will be vital to the company’s transition from a land acquirer to an oil and gas driller.

In fact, that shift will, perhaps, be the biggest challenge. It will, effectively, require changing the basis on which the company was founded and built. That’s a tall order since large companies are usually more like slow moving ships than agile race cars. It may even be impossible. McClendon built the company and instilled it with a way of doing business, a personality of sorts, that may be difficult to get rid of.

What to do?
While the transition is currently amicable, with both sides saying very nice things about the other, that doesn’t mean the company will thrive. Having an activist board member may help, but that hasn’t worked out too well at Sears Holdings Corporation (NASDAQ:SHLD), which continues to struggle with its core problems. Like Sears, Chesapeake still has notable core problems to deal with.

Note, too, that the shares remain well off of their highs. While the quick bounce on the news of McClendon’s departure was notable, there’s a lot of work to be done and future share price gains won’t be as easy to come by. Investors would probably be better off focusing on other companies than hoping for a big turnaround at Chesapeake.


The article Icahn Wins! What About Shareholders? originally appeared on and is written by Reuben Gregg Brewer.

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