After playing a big role in exposing Aubrey McClendon's extracurricular investment activity while playing CEO at Chesapeake, Reuters is now taking aim at McClendon's alter ego over at SandRidge. Tom Ward and McClendon do appear to be "two birds of a feather", which probably isn't coincidental since they have been practically joined at the hip since the early 1970's.
I don't have any investment in CHK or SD so all this drama is just entertainment for me, but I do wonder why in the face of so much appearance of self dealing investors still support these guys. I mean, even while Ward has made tens of millions, the shares of SD have more or less languished after losing much of their value soon after the IPO (although there have been opportunities for nimble traders to capture profits both on the long and short sides). According to the Reuters report:
SandRidge shares are down more than 80 percent since the day of their November 2007 debut. The Dow Jones U.S. oil and gas producers index - of which SandRidge is a component - is up around 5 percent over that same period.
In particular, at the risk of stepping in it considering the almost cult like following that Fairfax Financial enjoys in this forum, I just have to wonder about remarks like this one by Paul Rivett, vice president of operations at Fairfax [excerpted from the Reuters report]:
"We continue to strongly support Tom and his leadership at SandRidge. It seems to me that obviously Tom's done a lot of good and he's been transparent about his relationship with the company and the related-party transactions."
How do we reconcile that with this comment, also excerpted from the Reuters report:
The language in Ward's contract "doesn't pass the smell test," said Anne Sheehan, director of corporate governance for the California pension fund CalSTRS, which owns 880,000 SandRidge shares. "This board has sanctioned what Ward is doing."
What's SD's response to the critics calling for Ward's exit from the CEO job? According to Reuters, it's:
In materials prepared for shareholders in response to TPG-Axon's attempt to oust Ward and the board, the company says the $97 million pay-out is one reason to vote to retain the SandRidge's current directors. The payment would only be due if Ward were terminated without cause.
In my shorthand: "We can't afford to fire him."
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