Oil and natural gas company SandRidge Energy, Inc. (SD: Quote) Wednesday said it has reached a settlement agreement with activist shareholder TPG-Axon Capital and would add four of its nominees to the board, effective immediately.
TPG-Axon is the beneficial owner of around 7 percent of the outstanding shares of SandRidge. Its nominees being included on the board are Stephen Beasley, Edward Moneypenny, Alan Weber and Dan Westbrook.
As per the agreement, the Board of Directors will complete a review of the related-party transactions outlined by TPG-Axon by an independent firm. Results of that review are expected to be completed by June 15.
Tom Ward, Chairman and chief executive officer, will remain in those roles while the Board completes its review. The Board will decide by June 30, whether to terminate Ward’s employment or not.
While TPG-Axon has been unhappy with the functioning of the board for some time, in February it said WCT Resources, a company owned and controlled by trusts established by Ward for the benefit of his children, owns mineral rights adjacent to SandRidge in 22 counties in Oklahoma and Kansas which make up part of the Mississippian Lime formation, the Company’s primary oil and natural gas play.
TPG-Axon said at that time that it believes the adjacent land WCT Resources acquired could be worth billions of dollars if SandRidge’s efforts to build infrastructure and ‘prove out’ acreage in the Mississippian are successful.
SandRidge projects to spend roughly 80 percent of its entire remaining market capitalization this year to, among other things, increase the value of its Mississippian mineral rights, which could make the Ward family one of the biggest beneficiaries of this spending, TPG-Axon believed.
Sandridge said today that while the Board’s review so far has not revealed any improper conduct by Ward, the Audit Committee of the Board is conducting a further review, with the assistance of independent counsel. Results of that review are expected to be completed by June 15.
If the Board does not terminate Ward by June 30, three current directors will resign and one additional TPG-Axon nominee will be elected to the Board. Thus the board will have a majority of TPG-Axon nominees.
If Ward is no longer CEO, James Bennett will be appointed interim CEO, and the Board will conduct a search for a successor to Ward. Bennett has been appointed President and Jeffrey Serota has been appointed lead independent director.If Ward is no longer Chairman of the Board, Serota will be appointed interim Chairman for six months.
The Board will also conduct a comprehensive review of the company’s strategy and costs, with a special focus on reducing corporate overhead and optimizing capital expenditures.
As a symbol of its commitment to improving efficiency, the Board has reduced compensation for directors, effective immediately, from $375,000 to $250,000 annually.
TPG-Axon has agreed to terminate its consent solicitation. The firm will also withdraw its notice of intent to present some proposals and nominate certain individuals for election as directors at the company’s 2013 annual meeting.
Separately, SandRidge said Matthew Grubb, the company’s President and Chief Operating Officer, has informed his intent to resign to pursue other opportunities.
SD settled up 0.3 percent on Thursday at $5.85.
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by RTT Staff Writer
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