SandRidge Energy Inc. (SD) founder Tom Ward was ousted as the
oil and gas producer's chief executive and chairman, and will take
one of the biggest severance packages seen in the energy
industry--about $90 million, the company said Wednesday.
Mr. Ward came under fire last year for his high pay, the
company's weak stock performance and its dealings with businesses
controlled by Mr. Ward and his family during a monthslong proxy
fight. A spokesman said he was unavailable to comment.
Mr. Ward's ouster wasn't unexpected. SandRidge in March settled
a proxy fight with activist shareholder TPG-Axon Capital LP,
agreeing to either fire Mr. Ward or give control of its board to
the hedge fund. SandRidge, with a stock-market value of about $2.4
billion, appointed four directors nominated by TPG-Axon at the
time.
SandRidge promoted Chief Financial Officer James Bennett to CEO.
Mr. Bennett, who will remain president, worked in private equity
prior to joining SandRidge in 2011.
Mr. Ward founded SandRidge in 2006, after leaving natural-gas
producer Chesapeake Energy Corp., which he had co-founded with
Aubrey McClendon in 1989. Both executives in the past year came
under pressure for their companies' heavy spending, and
controversies involving their mixing of personal finances with the
companies they ran. Mr. McClendon, who resigned from Chesapeake in
April, received a package valued at nearly $50 million, including
$11 million in cash to be paid in regular installments.
TPG-Axon and another large shareholder, Mount Kellett Capital
Management LP, questioned SandRidge's transactions with entities
controlled by Mr. Ward and his family. SandRidge has said reviews
of the matter by its board and an outside law firm didn't find any
misconduct by Mr. Ward.
Mr. Ward's termination has been deemed "without cause," which
allows him to take the exit package outlined in his employment
agreement.
"Two separate Board investigations have now confirmed that Tom
Ward's actions were proper. No one has worked harder for or been
more loyal to SandRidge Energy than Mr. Ward," said Steven M.
Bauer, a lawyer representing Mr. Ward.
Mr. Ward's ouster comes amid a rise in activism in the energy
patch, as dissident shareholders also have shaken up the leadership
of energy producer Hess Corp. and offshore oil driller Transocean
Ltd.
TPG-Axon took aim at SandRidge in November, demanding Mr. Ward
step down for his role in land leases that were sold by Mr. Ward's
family members to SandRidge and the company's poor stock
performance. "The board has sanctioned compensation levels for Tom
Ward that are unconscionable in light of company performance," the
shareholder wrote last November. A spokesman for TPG-Axon declined
to comment on Wednesday.
SandRidge said its board terminated Mr. Ward after reviewing the
findings from an independent investigation into allegations of
improper related-party transactions leveled against Mr. Ward during
the proxy fight. The allegations involved drilling leases that were
sold by Mr. Ward's family members to SandRidge.
Board members, however, decided the investigation's findings
didn't merit Mr. Ward's termination with cause, which would have
limited the value of his exit package, and that the termination was
based on the "decision that new leadership is desirable at this
time."
Interim nonexecutive Chairman Jeffrey Serota said in an
interview Wednesday that the investigation was "exhaustive" and
that "no stone was left unturned." Regarding Mr. Ward's exit
package, Mr. Serota said, "It's all in his employment agreement;
there was no negotiation."
"The challenges and noise that we went through are all settled
now," Mr. Serota said. "It's about looking forward and executing on
our business plan."
Under terms of his employment contract, Mr. Ward will receive a
lump sum cash payment of $53.5 million; see 6,331,475 shares of
previously granted restricted stock vest, which is worth about
$32.1 million based on Wednesday's closing price of $5.08; and his
base salary of $1.5 million a year for three more years.
Its shares gained 4% in after-hours after finishing up 11 cents,
or 2%, at $5.08 on the New York Stock Exchange.
Alison Sider contributed to this article.
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