It doesn’t look good for embattled Sandridge (SD) CEO Tom Ward.
After several months of fighting, Sandridge Energy’s board of directors (of which Ward is the chairman) and activist hedge fund TPG have reached an agreement.
The key components of the deal seem to seal the fate for Ward:
· Four of the TPG-Axon Group's nominees, Stephen C. Beasley, Edward W. Moneypenny, Alan J. Weber and Dan A. Westbrook, will be added to the board of directors effective immediately.
· The board of directors will complete a review by an independent firm of the related-party transactions that have been outlined by TPG-Axon, and expects the results of that review to be completed no later than June 15, 2013. Ward will remain chairman and CEO while the board completes its review.
· The board of directors will decide by June 30, 2013, whether or not to terminate Ward's employment. If the board does not terminate Ward by June 30, 2013, three current directors will resign, and one additional TPG-Axon nominee will be elected to the board, resulting in a majority of the board being TPG-Axon nominees.
· In the event that Ward is no longer CEO, James Bennett will be appointed interim CEO, and the board will conduct a search for a successor CEO. Bennett has been appointed president and Jeffrey Serota has been appointed lead independent director. In the event Ward is no longer chairman of the board, Serota will be appointed interim chairman, for a term of six months.
The best case outcome for Ward is that he gets to remain as CEO but if he does, TPG gains control of the board of directors.
What kind of a productive working environment would that be? TPG of course has been publicly calling Ward a crook for the better part of six months. How could Ward possibly stay on and work with TPG in a constructive manner?
It is truly remarkable how both Ward and Chesapeake (NYSE:CHK) CEO McClendon appear set to be forced out of the very companies they founded within a couple of months of each other. Of course, Ward and McClendon together founded Chesapeake in the '90s and have become well known as risk-taking deal-makers as well as visionaries in the unconventional natural gas revolution.
Don’t feel too bad for McClendon and Ward though. Both chairman of their respective companies have paid themselves hundreds of millions of dollars in compensation for their duties as CEO. With the stock prices of both Sandridge and Chesapeake at fractions of their all time highs, I think it is fair to say that even with this ugly ending both men are making out better than their shareholders.
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