SandRidge Energy Inc. shareholders should side with TPG-Axon Capital Management LP and other activist investors and vote to replace five members of the company’s board, Institutional Shareholder Services said.
“The apparent failures of stewardship on this board are legion,” ISS, a unit of MSCI Inc., said in an e-mailed report today. TPG and other critics “have advanced a credible narrative that the company’s abrupt, piecemeal approach to corporate strategy and concomitant lack of capital discipline have increasingly limited the company’s financial flexibility, and engendered a deep distrust in the market.”
Shareholders should vote out five of SandRidge’s seven board members and remove Chief Executive Officer Tom Ward from his post as chairman, the shareholder advisory group said. Ward should stay as CEO since there is no replacement for him yet, ISS said, calling it “the lesser of two unpalatable alternatives.”
TPG, SandRidge’s third-largest shareholder, and Mount Kellett Capital Management LP have called on the oil and natural gas producer to bring in new directors and fire Ward after years of “disastrous” performance.
“We strongly disagree with ISS’ recommendation,” Greg Dewey, a spokesman for Oklahoma City-based SandRidge, wrote in an e-mail. “We have a strong and experienced board that is committed to delivering value to all stockholders.”
SandRidge rose 0.5 percent to $5.90 at the close in New York. The shares have declined 7.1 percent this year.
Another advisory company, Egan-Jones Ratings Co., said in a Feb. 13 report that shareholders should vote to keep the existing board.
The ISS report provides a neutral view to the back-and-forth between SandRidge and its critics, Jason Wangler, an analyst at Wunderlich Securities Inc. in San Francisco, said in a phone interview.
Shareholders have until March 15 to vote on SandRidge’s board members.