Chesapeake Energy Corp. (NYSE:CHK) announced it has agreed with Chairman and Chief Executive Officer Aubrey McClendon to early termination of Founder Well Participation Program (FWPP). The company also said it will name an independent, Non-Executive Chairman in the near future, upon which McClendon will relinquish the post of Chairman and continue as CEO.
Shares jumped 11.77 percent to $20.52 in early trade on Tuesday.
The Oklahoma City, Oklahoma-based natural gas and oil explorer said the renegotiated terms provide for the early termination of the FWPP on June 30, 2014, 18 months before the end of its current term on December 31, 2015.
The FWPP provides McClendon a contractual right to participate and invest as a working interest owner in new wells drilled on the company's leasehold. McClendon has agreed to forego such contractual right 18 months early without compensation.
"The Board is focused on serving the interests of shareholders. We believe separation of the Chairman and CEO roles will improve Chesapeake's corporate governance and the early termination of the FWPP will eliminate a source of controversy, both of which should send a positive signal to the market and improve shareholder value," said Merrill Miller, Jr., Chesapeake's Lead Independent Director and President and Chief Executive Officer of National Oilwell Varco.
Meanwhile, BMO Capital Markets upgraded its rating on CHK to "Outperform" from "Market Perform".
Over the past year, the stock has been trading in the range of $16.78 to $35.75.