NEW YORK (CNNMoney) -- Aubrey McClendon, the embattled chief executive of natural gas company Chesapeake Energy, will relinquish his title as chairman of the board, the company said Tuesday.

The news follows last week's announcement by Chesapeake that McClendon agreed to negotiate an early termination of the controversial Founder Well Participation Program (FWPP), which allowed him to take personal stakes in wells drilled by the company.









The incentive program came under fire last month following news that McClendon took out loans worth over $1 billion against his personal stake in the company's wells, raising concerns about a conflict of interest.

McClendon agreed to end the program in June 2014, more than a year ahead of schedule. He will receive no compensation in connection with the early termination, Chesapeake said in a statement.

Meanwhile, the board is also reviewing the financial deals between McClendon and "any third party that has had or may have a relationship" with Chesapeake.

The company said it will name a new chairman in the near future and is considering candidates who have "no previous substantive relationship with Chesapeake." It is also seeking input from shareholders.

O. Mason Hawkins, chief executive of the company's largest shareholder, Southeastern Asset Management, welcomed the move, saying in a statement he was pleased the board listened to shareholders' concerns.

"Aubrey was right to recognize that these actions are in the best interests of the company and its shareholders," said Hawkins.

Chesapeake board members stressed that Tuesday's move will improve corporate governance and eliminate a source of controversy with the FWPP.

McClendon, who will remain CEO, supported the move, saying he will have more time to focus on implementing the company's strategy as chief executive.

"This action reflects our determination to uphold strong corporate governance standards and will also enable me to focus my full time and attention on execution of the company's strategy," said McClendon.

"This is a big step in the right direction and will lead to changes that will help restore investors' confidence and the share price," said Fadel Gheit, an energy industry analyst at Oppenheimer & Co.

However, some experts say Chesapeake needs to do more to avoid conflicts of interest and ensure that shareholders' rights are protected.

"Some of the statements about corporate governance ring hollow," said Mark Hanson, an analyst at Morningstar. "They only do the bare minimum."

Hanson said one way to achieve more oversight would be for Chesapeake to climate its so-called classified board structure, which would then give shareholders more power to vote out board members.

However, the decision to withhold McClendon's compensation from the well deals was surprising, added Hanson. "He could have raised a stink, but he didn't, which was the right thing to do," said Hanson.

Shares of Oklahoma City-based Chesapeake (CHK, Fortune 500) rose 6% to end Tuesday at $16.90. But the stock erased those gains in extended trading after the company reported weaker-than-expected quarterly results.

The company said it lost $71 million, or 11 cents per share, in the first quarter. Excluding certain items, Chesapeake said it earned $94 million, or 18 cents per share, in the quarter.



Still, analysts surveyed by Thomson Reuters were expecting the company to report a profit of 28 cents per share.

Chesapeake shares are down nearly 12% year-to-date. In addition to concerns about McClendon's loans, low natural gas prices have also hurt the company.