Feb 15 (Reuters) - A majority of SandRidge Energy Inc’s directors should be replaced due to governance problems at the oil and gas company, proxy advisory firm ISS said in a report on Friday.
Hedge fund TPG-Axon Capital Management, one of SandRidge’s largest shareholders, has launched a campaign to replace all of SandRidge’s board and oust Chief Executive Tom Ward, citing weak management and the company’s poor stock performance.
The proxy advisory firm said that shareholders should back five of TPG-Axon’s seven nominees.
“ISS is reluctant to recommend for a majority change in a board, given the risks of unintended consequences ... In this case, however, the apparent failures of stewardship on this board are legion,” ISS wrote, citing among other factors the company’s weak capital discipline and compensation practices.
SandRidge said it strongly disagreed with ISS’ recommendation and continues to urge stockholders to reject TPG-Axon’s nominees.
TPG-Axon has made allegations of self-dealing by Ward and his family in land deals with the company. SandRidge has given Ward wide latitude to profit from personal oil-and-gas deals in ways that pose potential conflicts of interest with the company, according to a Reuters review of employment contracts and recent transactions.
ISS recommends that SandRidge board members Everett Dobson, William Gilliland, Daniel Jordan, Roy Oliver and Jeffrey Serota be replaced by five dissident nominees including TPG-Axon’s founder Dinakar Singh.
ISS is an independent firm that makes recommendations to large institutional shareholders on how they should vote on company issues.
SandRidge’s current board has seven members, including CEO Ward.
“We have a strong and experienced board that is committed to delivering value to all stockholders,” the company said in a statement.
Shares of SandRidge rose 4 cents to $5.91 in Friday afternoon trading on the New York Stock Exchange.