Tom Ward's future as CEO with SandRidge Energy Inc. is uncertain.
The company's board, which is led by Ward as chairman, on Wednesday added four seats for dissident shareholder TPG-Axon Capital, ending the New York-based hedge fund's takeover attempt.
TPG-Axon's representation on the board will become a majority if Ward is not fired by June 30.
“It looks like Tom Ward's days are numbered here,” Morningstar analyst Mark Hanson said. “If the current board doesn't terminate him in the next three months, it looks like TPG takes control and they will oust him, I'm sure, shortly thereafter.”
Edmond investment adviser Greg Womack said Wednesday's “surprise” agreement seemingly gives Ward a chance to audition for his job.
“He's a great talent. He knows his business,” said Womack, president of Womack Investment Advisers Inc. “He's probably the right man for the job.”
He said the agreement with TPG-Axon gives SandRidge's current board some control over the future of the company. The end of the proxy fight means SandRidge officials can shift their focus to running the company.
“They desperately need to do that,” Womack said.
If Ward were terminated without cause, he would stand to receive nearly $96 million, according to SandRidge's proxy statement filed in April 2012. Ward would be owed nothing if he were terminated with cause.
The proxy does not state what would happen if Ward were to resign or retire.
SandRidge's executive team is changing, no matter what comes of Ward.
Matthew K. Grubb, SandRidge's president and chief operating officer, informed the company Wednesday of his intent to resign to pursue other opportunities. He has been with SandRidge since 2006.
James Bennett has been appointed president to succeed Grubb. Bennett, who had been the company's executive vice president and chief financial officer, will be named interim CEO if Ward is fired.
TPG-Axon had been critical of the compensation SandRidge paid to all three executives because they received more money than executives at other companies in SandRidge's peer group.
Hedge fund nominees Stephen C. Beasley, Edward W. Moneypenny, Alan J. Weber and Dan A. Westbrook were added to the SandRidge board on Wednesday.
TPG-Axon could add a fifth member if Ward remains with the company past June 30. Current director Daniel W. Jordan and other unnamed directors, who already have submitted their resignations, would leave the board at that time, according to the settlement agreement.
SandRidge's new augmented board will have an outside firm review the company's dealings with entities controlled by Ward's family before deciding whether to keep him as CEO.
The board also will take a comprehensive look at SandRidge's strategy and costs. It is slashing director pay from $375,000 a year to $250,000 as a symbol of its commitment to improving efficiency.
“Going forward, the company will focus on maximizing the potential of its existing assets, particularly its valuable position in the Mississippian formation,” said Jeffrey Serota, the board's lead independent director. “In addition, we remain committed to creating long-term value for all stakeholders including our shareholders and employees and the communities in which we operate.”
The Greater Oklahoma City Chamber has kept a careful eye on the struggle for control of SandRidge, President Roy Williams said, while remaining wary of TPG-Axon.
“I don't really know what this company 's (TPG-Axon's) objective is,” Williams said. “They want to increase shareholder value. There are a lot of ways to do that.
“Hopefully they see the value of what the company is doing here and their employees. Hopefully the company comes out of this OK.”
Williams said shake-ups like the one at SandRidge are part of the city becoming a major player in the energy industry.
“They're indicative of what's going on in this marketplace,” Williams said. “We're becoming an epicenter, companies are growing, and that's SandRidge's story, as well. They're not just a big employer, they're a big contributor to our community as well.
“We hope they will continue in that manner, be a corporate citizen and continue to grow.”
Contributing: Paul Monies and Steve Lackmeyer,