SandRidge Energy Inc and activist hedge fund TPG-Axon Capital struck a deal on Wednesday that could lead to the removal of the oil and gas company's chief executive, Tom Ward, SandRidge said.
The company has been under fire since last year from TPG-Axon and another hedge fund for governance lapses and strategic missteps. TPG-Axon, which owns 7.3 percent of SandRidge, launched a campaign to oust Ward and the company's entire board of directors.
SandRidge said that four directors nominated by TPG-Axon will be added immediately to SandRidge's board, which will engage an independent firm to review land deals by Ward and his family.
Apart from claims of strategic missteps, TPG-Axon has alleged that Ward and the company's board allowed WCT Resources, an Oklahoma company run by Ward's son, Trent, to acquire the rights to drill for oil and gas on more than 550,000 acres in Kansas and Oklahoma, an area where SandRidge is the most active driller.
SandRidge said that its board will decide whether to terminate Ward by June 30.
But if Ward is not terminated by June 30, directors nominated by TPG-Axon - which has been agitating for Ward's removal since November - will be given majority control of the board.
SandRidge also said that Chief Operating Officer Matthew Grubb plans to resign.
A vote on TPG-Axon's proposal to remove SandRidge's entire board was set to wrap up on Friday. The fund agreed to shut down that vote and end its plans to make proposals and nominate directors at this year's annual meeting.
SandRidge shares closed up 2 cents at $5.85 on the New York Stock Exchange. The shares are down nearly 80 percent since their November 2007 debut. The Dow Jones U.S. oil and gas producers index - of which SandRidge is a component - is up around 9 percent over that same period.
(Additional reporting by Anna Driver in Houston; editing by Gary Hill and Matthew Lewis)