And the verdict from the board is "not-guilty!"
Here is a thought though. The board notes that transactions between Sandridge (SD) and WCT Resources (a Ward family Trust) have occurred infrequently. I have to ask, why do they happen at all?
Ward is paid tens of millions of dollars by Sandridge shareholders. For that kind of money I don't think there should be a single transaction that comes anywhere close to smelling a little fishy.
Actually, even if his compensation was somewhat reasonable I don't see why the CEO should have any interests in the same industry, in the same region as the company he is running.
Here is the release from the company:
OKLAHOMA CITY, Jan. 25, 2013 /PRNewswire/ -- SandRidge Energy, Inc. (SD) today released the following statement on behalf of its Board of Directors.
TPG-Axon Group has made allegations in public statements concerning certain activities of our Chairman and Chief Executive Officer, Tom Ward, and questioning the Board's oversight of those activities. Specifically,TPG-Axon claims that Mr. Ward and WCT Resources, LLC, an independent oil and gas company, have engaged in "front running" and "flipping" leasehold interests to the Company. TPG-Axon also notes that WCT Resources actively competes with the Company in its Mississippian Lime play. Mount Kellett Capital Management LP has also voiced its concern regarding the allegations made by TPG-Axon. The Board has reviewed issues related to these allegations several times over the Company's history and has found no wrongdoing to have taken place.
WCT Resources was formed in 2002 by irrevocable trusts established in 1989 for the benefit of Mr. Ward's children, all of whom are adults. The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the Company and have no access to non-public information concerning the Company's land and mineral acquisition programs. Mr. Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business. Thus, contrary to TPG-Axon's assertions, neither the Company nor Mr. Ward has the power to "allow" WCT Resources to engage in any business regardless of whether it competes with the Company. As an ongoing business not controlled by the Company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses.
Transactions between WCT Resources and the Company have occurred rarely, involve less than one-quarter of one percent of the acreage leased by the Company in the Mississippian play and have been reviewed and approved in advance by disinterested Board members. The Company maintains and enforces a written policy that requires material related party transactions to be reviewed and approved by disinterested members of the Board. In connection with enforcing that policy, and meeting certain disclosure requirements of the Securities and Exchange Commission, disinterested members of the Board have thoroughly reviewed and approved transactions between the Company and WCT Resources and other related party transactions disclosed in the Company's public filings.
TPG-Axon goes to great lengths to establish that WCT Resources owns leasehold acreage adjacent to acreage held by the Company. Given the Company's vast acreage holdings in the Mississippian play, which include interests in over 7,500 sections covering nearly five million acres in 30 counties throughout an area that encompasses approximately 17 million acres, this is an entirely unremarkable fact. Virtually all companies active in the play are likely to have some interests that could be characterized as adjacent to the Company's holdings.
TLW Land & Cattle LP, an entity in which Mr. Ward has an ownership interest, has owned significant ranch land and other surface acreage inOklahoma and Kansas, and associated mineral rights, for many years. All of the mineral interests owned by such entity were acquired as part of the purchase of ranch land or other surface acreage. The acquisition of this property took place over a long period beginning well before the formation of SandRidge. Substantially all of this property was acquired prior to 2009, over a year before SandRidge had active operations in the areas at issue and before the emergence of the Mississippian play as a viable onshore resource play. Mr. Ward disclosed these longtime business interests to the Board early in the Company's history and has discussed them with the Board several times over the past several years, and the Board has found no evidence of impropriety or "front running."
While the Board's perspective on these and other issues may diverge from TPG-Axon's, the Company's directors continue to value the input of its stockholders. As part of its continuing oversight duties, the independent members of the Board will consider the requests of TPG-Axon and Mount Kellett for the appointment of independent counsel and other investigative measures concerning the activities surrounding their allegations.
And the verdict from the board is "not-guilty!"