Chesapeake Energy Bows to Raider Carl Icahn, Will Shake Up Board Scott Eells / Bloomberg / Getty Images Embattled natural gas giant Chesapeake Energy has bowed to billionaire investor Carl Icahn and agreed to shake up its board of directors heading into the company's crucial annual meeting this week. The move comes after the legendary Wall Street raider bought a large position in Chesapeake and launched a campaign for change amid ongoing scrutiny of the company's business strategy, slumping stock price, cash crunch, and corporate governance practices. In a statement Monday, Chesapeake said it would replace four of its board members with new independent directors. Icahn responded with a statement praising the move. Chesapeake shares rose nearly 2% in early trading Monday as investors praised the move. This is Icahn's second pass as a major Chesapeake shareholder. Last year, he made a reported $500 million selling his shares at their peak of about $30 last year. In recent weeks, with Chesapeake shares down about 50% in the last year, Icahn acquired a 7.6% percent stake in Chesapeake and requested changes to the company's board. He warned ominously that he was prepared to take "immediate" action if his demands weren't met. The raider's complaints echoed those of Chesapeake's largest shareholder, Southeastern Asset Management, which owns 13.6% of the company, and had also called for reforms. More: Billionaire Raider Carl Icahn: Just What Chesapeake Energy Needs? On Monday, Chesapeake said it has agreed to add four new independent directors to replace four existing independent directors who will resign from the board. Three of the new directors will be proposed by Southeastern and the fourth will be Icahn himself or a person he chooses, the company said. In a statement cited by Forbes, Icahn welcomed the move: "We appreciate the board's willingness to listen to shareholders and to respond appropriately. Under Aubrey's leadership, Chesapeake has assembled great assets and I am confident I can help the company create significant value from these assets. Although Chesapeake is sitting on lucrative oil and gas assets, the company's shares have been battered lately, thanks to a dramatic decline in natural gas prices, which has been driven by a glut of gas on the market. In response to the company's growing cash crunch - estimated to be over $10 billion this year - CEO Aubrey McClendon wants to move the company away from natural gas drilling to more lucrative oil drilling, and raise billions by selling off assets. In a bit of good news, Chesapeake said over the weekend that it has found one of the largest oil discoveries in its history, in the Anadarko Basin of Texas and Oklahoma. The board shakeup was welcomed by investors Monday, with Chesapeake shares surging over 2%. "I would have to say hats off to Mr. Icahn and Southeastern," Morningstar analyst Mark Hanson told The Wall Street Journal. Shareholders will be much better served going forward. More: "Fracking" Titan Chesapeake Energy in Stock Swoon Amid Cash Crunch Chesapeake's board has faced criticism for its oversight of McClendon's financial dealings, including revelations that McClendon ran a secret $200 million hedge fund that traded natural gas at the same time he was CEO of the natural gas giant. He also received over $1 billion in undisclosed personal loans over the last three years, secured by his stake in Chesapeake's oil and gas wells. Both the Internal Revenue Service and the Securities and Exchange Commission have begun preliminary probes into the company. In response, Chesapeake's board stripped McClendon of his role as chairman, and curtailed the CEO's controversial well-stake compensation plan. He will remain on the board, according to the agreement announced Monday. Chesapeake's annual meeting is scheduled for this Friday at company headquarters in Oklahoma City.