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The board approved a universally ridiculed deal with Bonanza Creek Energy. On November 15, 2017, SandRidge announced that it had entered into an agreement to acquire Bonanza Creek Energy in a massively dilutive and overpriced transaction. Until the surprise announcement of this proposed acquisition, management's guidance to stockholders had been to protect the balance sheet, reduce operating costs, generate free cash flow and develop its significant remaining inventory in the Northwest STACK and North Park Niobrara in a disciplined manner. The proposed acquisition would have put SandRidge in a fifth and sixth basin with no obvious synergies between any of its assets and was described by one commentator as "an egregious example of how oil companies chase size at the expense of shareholder value."1 The announcement resulted in nearly instantaneous condemnation from the largest stockholders of the company, one of whom stated publicly: "The proposed acquisition represents a complete reversal of management's post-bankruptcy strategy and reminds us of SandRidge's prior history when this same management team acquired disparate assets and added leverage with reckless abandon."2 Following the announcement of the deal, SandRidge's stock immediately plummeted 16%, incinerating over $100 million of market value in a single day.3 Because the deal was met with such vociferous and overwhelming opposition from a number of large stockholders, including us, it was terminated on December 28th – before even being put to a stockholder vote. Astonishingly, the board continues to this day to defend the failed Bonanza deal with remarkably tone-deaf statements such as "Given BCEI's actual share price performance relative to SD, BCEI acquisition should have increased SD's current share price."4 We are extremely concerned that if the current "process" is conducted without parental supervision the board could be entering into similar value-destroying transactions with high break-up fees. Unfortunately, the board's ill-advised little frolic with Bonanza cost stockholders over $8.2 million in wasted transaction costs. we do not believe the incumbent directors may simply hide behind "business judgment" to explain away this corporate waste but rather should be required to demonstrate how their actions do not constitute gross negligence or a breach of the duties they owe to sandridge and its stockholders.
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The board adopted a poison pill that was an insult to all stockholders. To add insult to injury, the board tried to use an unorthodox poison pill to ram through the wildly unpopular Bonanza deal. The pill broke new ground for poor corporate governance, containing purposely ambiguous provisions that would make a totalitarian dictator blush. For example, it prohibited stockholders from merely talking or meeting with one another to discuss opposition to the Bonanza transaction (but conveniently contained a provision that explicitly gave management the right to campaign in favor of the deal). It appears that the board has never heard of the First Amendment. Does anyone believe that if the incumbent directors are re-elected they will not blatantly disregard stockholders' rights again?
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The board let former CEO James Bennett slink away with a king's ransom in severance. SandRidge has a long history of excessive compensation – including a $90 million severance payment to former CEO Tom Ward in 2013 when James Bennett took over as CEO – and that ignoble trend continued unabated after the emergence from bankruptcy. As a reward for participating in over $5 billion in value destruction, overseeing the company's demise into bankruptcy and completely wiping out the former stockholders, Mr. Bennett received a 2017 base salary that exceeded the 90th percentile of SandRidge's peer group companies and was awarded over $50 million in compensation during his tenure with SandRidge (not including his recent severance windfall). On February 8th, in direct response to repeated complaints by large stockholders, including us, SandRidge finally announced the firing of Mr. Bennett (as well as CFO Julian Bott). However, by concluding that Mr. Bennett's termination was without cause, a decision which is shocking considering Mr. Bennett's stewardship of the company into both a bankruptcy and the Bonanza Creek debacle, Mr. Bennett became entitled to severance under his employment agreement. But that travesty pales in comparison to the unfathomable result that the company's emergence from bankruptcy constituted a "change in control" under the terms of Bennett's employment agreement. This means that his firing entitled him to change in control severance benefits of over $17.1 million because of a bankruptcy that occurred under his leadership (while Bott walked away with over $6.5 million). In total, James Bennett's "reward" for nearly destroying the company was almost $70 million or approximately 14% of the current market capitalization of SandRidge. we do not believe the incumbent directors may simply hide behind "business judgment" to explain away this corporate waste but rather should be required to demonstrate how their actions do not constitute gross negligence or a breach of the duties they owe to sandridge and its stockholders.
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Bill Griffin
Interim President and CEO
Director since SandRidge emerged
from bankruptcy in October 2016
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approved disastrous bonanza creek deal
approved massively dilutive poison pill
approved egregious james bennett comp
Under his short tenure, SandRidge has continued to hedge virtually all of 2018's guided oil production at approximately $56 per barrel (resulting in lost value of roughly $10 for every barrel the company will produce this year5) and over half of 2019's estimated production at approximately $54/ per barrel. He has not put forward a clear vision for the company, having already seemingly back-tracked on his "strategy" once during his short tenure as CEO.
Since the day he joined the board following SandRidge's emergence from bankruptcy through the close of trading on June 1, 2018, the company's stock price has declined 24.7%, while the S&P 500 Index and WTI Crude Oil have risen 27.2% and 35.2%, respectively.
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David J. Kornder
Director since SandRidge emerged
from bankruptcy in October 2016
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approved disastrous bonanza creek deal
approved massively dilutive poison pill
approved egregious james bennett comp
In November 2016, he co-founded Sequel Energy Group, backed by GSO Capital Partners LP, the same company which employed James Bennett as a Managing Director prior to his tenure at SandRidge.
Since the day he joined the board following SandRidge's emergence from bankruptcy through the close of trading on June 1, 2018, the company's stock price has declined 24.7%, while the S&P 500 Index and WTI Crude Oil have risen 27.2% and 35.2%, respectively.
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Michael L. Bennett
Chairman
Director since SandRidge emerged
from bankruptcy in October 2016
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approved disastrous bonanza creek deal
approved massively dilutive poison pill
approved egregious james bennett comp
Currently Chairman at another company, OCI Partners LP, which is the target of a public shareholder campaign. In that case, the shareholder stated that it fears the parent company may pursue an unfair squeeze-out of minority holders.
Since the day he joined the board following SandRidge's emergence from bankruptcy through the close of trading on June 1, 2018, the company's stock price has declined 24.7%, while the S&P 500 Index and WTI Crude Oil have risen 27.2% and 35.2%, respectively.
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Sylvia K. Barnes
Director since February 2018
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ms. barnes has been with sandridge for only a few months and thus is an unknown quantity. however, she was handpicked by messrs. griffin, kornder and bennett, architects of the myriad epic failures catalogued above, and has already demonstrated questionable judgment by joining in their ill-advised defense of the ridiculous bonanza deal.
Principal and Owner of Tanda Resources LLC. Previously held positions with KeyBanc Capital Markets; Madison Williams (2009 to 2011), which filed for bankruptcy in 2011; Merrill Lynch/Petrie Parkman; and Nesbitt Burns.
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Kenneth H. Beer
Director since April 2018
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mr. beer has been with sandridge for only a few months and thus is an unknown quantity. however, he was handpicked by messrs. griffin, kornder and bennett, architects of the myriad epic failures catalogued above, and has already demonstrated questionable judgment by joining in their ill-advised defense of the ridiculous bonanza deal.
Executive Vice President and Chief Financial Officer of Stone Energy Corporation, (2005 to present), which filed for bankruptcy in 2016. Previously held positions with Johnson Rice & Co.; Howard Weil; Wood Mackenzie/Gintel; and Boston Consulting Group.
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Bob Alexander
independent
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Founder of Alexander Energy Corp., where he served as Chairman of the Board, President and Chief Executive Officer from 1980 to 1996. Alexander Energy merged with National Energy Group, Inc., an oil and gas property management company, in 1996 where he served as President and CEO from 1998 to 2006. He previously served in various roles at Reserve Oil, Inc., including President of Basin Drilling Corp., and served on numerous committees with the Independent Petroleum Association of America, the Oklahoma Independent Petroleum Association and the State of Oklahoma Energy Commission. He has also served on various boards at large E&P companies and has a Geological Engineering degree.
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John "Jack" Lipinski
independent
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Served as CEO and President, and a Director of CVR Energy, Inc. from 2007 to 2017. Prior to the formation of CVR Energy, he served as CEO and President of Coffeyville Resources, LLC. Mr. Lipinski has more than 40 years of experience in the petroleum refining and nitrogen fertilizer industries. He began his career with Texaco, Inc. in 1985, later joined The Coastal Corporation, serving through various mergers and acquisitions along the way. He previously served on the board of Chesapeake Energy Corp., a large E&P company, as well as various other public company boards.
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Randolph Read
independent
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Has been President and CEO of Nevada Strategic Credit Investments, LLC, an investment fund, since 2009. Started his career at Atlantic Richfield Company (ARCO), where he raised capital to finance E&P in the Alaskan North Slope region and later served as the President of C&S Oil and Gas Company, Inc., a private oil and gas company operating primarily in the southwest United States. He has served as: independent director of New York REIT, Inc., including as non-executive chairman of its board of directors; an independent director of Business Development Corporation of America; an independent director of Business Development Corporation of America II until its liquidation and dissolution; and the non-executive chairman of the board of directors of Healthcare Trust, Inc.
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Jonathan Christodoro
independent
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Currently a private investor, he served as a Managing Director of Icahn Capital LP, where he was responsible for analyzing, managing investments and serving on public boards. He previously served in various investment and research roles at large hedge funds including P2 Capital Partners, LLC, Prentice Capital Management, LP and S.A.C. Capital Advisors, LP. He is currently a director of: Xerox Corporation, PayPal Holdings, Inc., Lyft, Inc., Enzon Pharmaceuticals Inc., and Herbalife Ltd. Mr. Christodoro was previously a director of: Cheniere Energy, Inc., American Railcar Industries, Inc., Hologic, Inc., eBay Inc., and Talisman Energy Inc.
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Nancy Dunlap
independent
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Serves as the private counsel and head of the private family office of former New Jersey Governor and United States Senator Jon S. Corzine. Since 1999, Nancy has overseen all personal investment and legal affairs of the Corzine Family Office. Nancy has extensive experience performing diligence, analysis and oversight of investment decisions ranging from hedge fund, commercial real estate, and direct private equity, debt investments, and many other investment related activities. She also oversaw financial activities in one senate and two gubernatorial campaigns, has experience in investment banking and serving as a director.
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Nicholas Graziano
icahn employee
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Serves as Portfolio Manager of Icahn Capital, where he makes and manages investments in E&P and other spaces. Was previously the Founding Partner and CIO of the hedge fund Venetus Partners LP, where he was responsible for portfolio and risk management, along with day-to-day firm management. Prior to Venetus, he was a Partner and Senior Managing Director at Corvex Management LP, and a Portfolio Manager at Omega Advisors, Inc. before that. He is currently a director of: Conduent Incorporated, Herc Holdings Inc., Xerox Corporation and Herbalife Ltd. Mr. Graziano previously served on the board of directors of each of: Fair Isaac Corporation, WCI Communities Inc. and InfoSpace Inc.
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Jonathan Frates
icahn employee
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Serves as an analyst at Icahn Enterprises L.P., where he researches, evaluates, and monitors E&P and other private and public investments. He previously served as a business analyst at First Acceptance Corp., as an associate at private equity firm Diamond A. Ford Corp., and as an analyst at Wachovia Securities, LLC, where he started his career. He has extensive M&A and investment experience, as well as experience serving as a director on numerous public company boards. He is currently a director of: Ferrous Resources Limited, CVR Partners LP, American Railcar Industries, Inc., Viskase Companies, Inc., CVR Energy, Inc. and CVR Refining, LP.
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FOR OUR HIGHLY-QUALIFIED NOMINEES AS DIRECTORS RATHER THAN THE FAILED INCUMBENT BOARD
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AGAINST THE BOARD'S PROPOSAL TO ENTRENCH THEMSELVES BY RATIFYING AND EXTENDING THE MASSIVELY DILUTIVE POISON PILL
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AGAINST THE BOARD'S PROPOSAL TO APPROVE THE COMPANY'S EGREGIOUS EXECUTIVE COMPENSATION
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