Carl Icahn demands changes at SandRidge

Activist investor Carl Icahn on Tuesday demanded SandRidge Energy Inc. reshape its board and change its policies.

The move comes less than two weeks after SandRidge directors bowed to Icahn’s earlier demand to drop its plans to buy Colorado-based Bonanza Creek Energy.

“We were obviously pleased that you made the wise choice to terminate the Bonanza merger agreement, but we still have grave concerns about many of the things this board of directors has permitted to happen at SandRidge,” Icahn said in the letter filed with federal regulators Tuesday.

SandRidge executives and directors said Tuesday they are in discussions with Icahn and other shareholders.

“The SandRidge board of directors and management team value constructive shareholder dialogue and are engaged in ongoing discussions with shareholders, including Mr. Icahn,” the company said in a statement.

“In this regard, SandRidge’s independent board members are scheduled to meet with several major shareholders next week, including Mr. Icahn.”

Icahn called for two of Oklahoma City-based SandRidge’s five directors to resign and to be replaced by new directors designated by shareholders, including one of his choosing.

The investor also said at least four of the five directors should be required to agree before the approval of any “extraordinary transactions” — including acquisitions, divestitures and equity issuances.

Demands to cancel poison pill

Icahn also demanded SandRidge directors cancel the socalled poison pill put in place in November after Icahn gained a 13.5 percent stake in the company. Icahn pointed out that SandRidge directors initially said they put the shareholder rights plan in place to comply with the company’s obligations under the plan to buy Bonanza Creek Energy.

“Since the Bonanza merger agreement has been terminated and the share issuance proposal has been abandoned, it stands to reason that SandRidge must now terminate the pill,” Icahn stated in the letter.

Icahn praised SandRidge director’s plans to meet next week with some of the

company’s largest shareholders, but asked for clarification this week about the poison pill.

“If the pill is not terminated immediately, then SandRidge should dispel lingering shareholder concern by making a public announcement, by no later than Thursday, January 11th, stating unequivocally that discussions among shareholders concerning the above proposed changes — and any other corporate governance changes suggested by the shareholders — will not trigger the pill,” Icahn stated in the letter.

SandRidge directors said the poison pill does not limit that kind of discussion.

“As we have already confirmed in writing to Mr. Icahn on two separate occasions ... the short-term rights plan does not prevent shareholders from speaking with each other as long as they do not form a group and comply with federal

securities laws,” the company said in Tuesday’s statement.

Compensation complaints

Also in Tuesday’s letter, Icahn again complained about the company’s executive compensation, including the $90 million payout to former CEO Tom Ward when he was fired following a shareholder revolt in 2013 and CEO James Bennett’s salary and bonuses last year while shareholder equity was canceled through bankruptcy reorganization.

Icahn concluded the letter with a threat of further action if the directors do not respond quickly.

“The last thing we want to see is more money squandered on unnecessary and distracting fights,” he said. “However, be assured that if you continue to turn a blind eye to the interests of shareholders, we will not hesitate to

take whatever actions we deem necessary to protect our investment.”

Also in regulatory filings in recent days, three SandRidge executives disclosed that they have sold more than one-fifth of their SandRidge shares on the open market.

CEO James Bennett on Jan. 2 sold 100,000 shares for more than $2.1 million. The sale represented almost 22 percent of Bennett’s previous stake.

On the same day, Philip Warman, senior vice president and general counsel, sold 13,351 shares for more than $283,000. That sale was about 21 percent of Warman’s SandRidge shares.

On Jan. 5, John Suter, SandRidge’s executive vice president and chief operating officer sold 22,803 shares for $472,706. Suter sold almost 21 percent of his SandRidge shares.

SandRidge representatives did not respond to multiple requests for comment about the stock sales.