Chesapeake and its board have come under fire in recent weeks after Reuters reported, among other things, that Chesapeake CEO Aubrey McClendon had taken out more than $1 billion in previously undisclosed loans using his interest in company wells.

The source of the executive's financing, EIG Global Energy Partners, also has big investments in Chesapeake, a situation that analysts and academics argue could put the executive's interest ahead of his shareholders.

The natural gas producer said each of its eight outside directors will receive total annual compensation of $350,000, comprised of a $100,000 cash component and a $250,000 equity component.

Phil Weiss, analyst at Argus Research, said the changes were positive, but said more was needed.

"I'd like to see there be some more turnover on the board. reactionary doesn't cut it," Weiss said. "There needs to be real change."

The reduction puts the pay at or below the average director compensation at Chesapeake's peers, it said.

Prior to the cut, Chesapeake's directors were richly compensated. In the last three years, total compensation for all of Chesapeake's directors was valued at $13.3 million. That is far above peers Devon Energy Corp's $4.5 million and EOG Resources Inc's $7.5 million, according to data compiled by Reuters.

Directors were also allowed to use take personal trips on jets in which Chesapeake has a fractional ownership, a perk described by proxy governance firm ISS as a "problematic director pay practice" in a 2011 report.

Earlier this week, Chesapeake shareholders asked a judge to delay the June 8 annual meeting, arguing more disclosures are needed about McClendon's loans and pay.

New York Comptroller John Liu on Thursday urged shareholders to withhold support for the two Chesapeake directors up for re-election, Richard Davidson and Burns Hargis.

Since the Reuters investigation was published on April 18, Chesapeake's board said it will strip McClendon of his chairman's title and the company and its CEO have increased disclosures about the program that grants an interest in all company wells, called the Founders Well Participation Program.

Chesapeake said its search for a non-executive chairman to head up the oil and gas company is progressing.

(Additional reporting By Matt Daily and Mike Erman in New York; Editing by Bob Burgdorfer)

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