(In March 13th story, corrects number of board members replaced at Hess to six from three in 18th paragraph)
* Company has been under fire by investor TPG-Axon
* Four TPG-Axon-nominated directors join SandRidge board
* Board to review land deals by CEO Tom Ward
* Board to decide Ward's fate by June 30
March 13 (Reuters) - 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 near SandRidge operations.
SandRidge said that its board will decide whether to terminate Ward by June 30. SandRidge has said that its board found no wrongdoing in the land deals and that WCT was "an independent oil and gas company."
But a Reuters review of chief executive Ward's employment contracts found that SandRidge's board had given Ward and his family wide latitude to profit from personal oil-and-gas deals in ways that could pose potential conflicts of interest.
Ward has not responded to repeated requests for comment about his or his family's land deals.
Even 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. A source familiar with TPG-Axon said the hedge fund's position on Ward has not changed.
Ward is eligible to receive a "golden parachute" payment of more than $90 million if he is terminated without cause, according to SEC filings. If he is fired for cause, he will not receive any payments from the company.
SandRidge also said that Chief Operating Officer Matthew Grubb plans to resign.
'VICTORY FOR ACTIVISTS'
"I think this is entirely justified and it's a clear victory for the activists," said Mark Hanson, oil company analyst at Morningstar. "Given the stock price, the continued outspending and the related party transactions, there is not a lot to like about this name and it was driven by one man and his management team."
Grubb's exit and Ward's possible departure reflect a wave of governance overhaul at U.S. oil and gas companies amid increased shareholder activism in the past year.
Corporate governance experts said the spate of leadership overhauls at U.S. energy companies was unprecedented, and was spurred by frustration with a cozy industry where many of the top executives also founded the companies they ran.
"Some of these companies have had performance issues. Some of them have had conflict issues. Some of them have had performance issues combined with some dominating families," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.
A series of Reuters investigations last year, coupled with financial strain, led to the departure of six board members at Chesapeake Energy Corp, the Oklahoma City oil and gas company co-founded by Tom Ward and Aubrey McClendon in 1989. McClendon, Chesapeake's chief executive, will leave the company on April 1. He resigned as chairman of the company's board last May.
Like Ward, McClendon entwined his personal finances with those of the company he ran far more than shareholders knew.
Ward resigned from Chesapeake in 2006 to start his own natural gas company, SandRidge, several miles away in Oklahoma City.
This month, energy company Hess Corp agreed to replace six board members and sell a range of assets amid calls for change from investor Elliott Associates.
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.
In a report to investors last month, influential proxy advisory firm ISS endorsed the replacement of a majority of SandRidge's board, in part because "the apparent failures of stewardship on this board are legion."
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. (Reporting by Michael Erman in New York and Anna Driver in Houston; editing by Gary Hill and Matthew Lewis)