After months of criticism meant to spur an investor uprising, SandRidge Energy Inc. on Wednesday added four representatives of dissident shareholder TPG-Axon Capital to its board, signaling the possible departure of CEO Tom Ward.
TPG-Axon, a New York-based hedge fund, had been pushing SandRidge shareholders to oust the current board, citing the company's poor stock performance since its initial public offering in 2007.
Votes in the proxy fight were due by Friday, but SandRidge announced it had reached a settlement agreement with TPG-Axon on Wednesday after the markets closed.
SandRidge closed up 2 cents at $5.85 a share. The stock price was unchanged in aftermarket trading.
“For the most part, TPG got their way,” Edmond investment adviser Greg Womack said after the settlement was announced.
The deal could lead to the departure of Ward, who will remain as CEO while an independent firm reviews the related-party transactions criticized by TPG-Axon.
SandRidge said Wednesday that Matthew K. Grubb, the company's president and chief operating officer, had resigned — effective Friday — “to pursue other opportunities.”
James D. Bennett, SandRidge's executive vice president and chief financial officer, will retain the title of chief financial officer and replace Grubb as president, the company said.
TPG-Axon had questioned SandRidge's dealings with WCT Resources, a company run by Ward's son, Trent Ward, and controlled by trusts created to benefit Ward's adult children. SandRidge's board has maintained there was nothing improper in those deals.
A review is expected to be completed by June 15.
SandRidge's new 11-member board will decide by June 30 whether to dismiss Ward.
If Ward stays, a fifth TPG-Axon representative will be named to the board and three current directors will resign, giving the shareholder control of a majority of the board.
Wednesday's action expands the board from seven directors to 11, four of which were selected by TPG-Axon. If Ward stays with the company, the board would be reduced to nine, including five chosen by the dissident shareholder group.
“We believe these actions open a new chapter for SandRidge,” said Jeffrey Serota, the head of a Los Angeles-based investment firm who has been appointed SandRidge's lead independent director. “We look forward to the immediate contribution of our new directors.”
As part of the settlement, TPG-Axon has agreed to end its ongoing bid to oust the SandRidge board.
“We are pleased to reach agreement with the SandRidge directors, and look forward to working together to build shareholder value,” TPG-Axon CEO Dinakar Singh said. “We believe the actions taken by the board address our concerns, and are a promising start to a bright future for SandRidge.
“We all believe that SandRidge has tremendous asset value, and we expect that the company will relentlessly focus on growing and realizing that value through a particular focus on execution and efficiency.”
The new SandRidge board members are Stephen C. Beasley, Edward W. Moneypenny, Alan J. Weber and Dan A. Westbrook.
The board will conduct a comprehensive review of SandRidge's strategy and costs, with an eye toward reducing overhead and optimizing capital expenditures. That begins with an immediate pay cut for directors from $375,000 a year to $250,000.