SandRidge Energy: Not in best interests of holders to accept Ichan's proposal
SandRidge Energy issued a letter to shareholders following its meetings with large shareholders last week. "Dear Fellow SandRidge Shareholder: The independent members of the SandRidge Board of Directors have recently met with several large shareholders of the Company to discuss and seek input on a wide variety of topics, including the Company's objectives, its assets, economic growth alternatives, financing strategies and the recent public proposal from Carl Icahn. We look forward to continuing expanded dialogue with all of our shareholders. Over the next several weeks, we will also give careful consideration to other concerns voiced by the shareholders and will develop, implement and communicate each plan of action. After careful deliberation, the Board has decided that it is not in the best interests of all shareholders to accept Mr. Icahn's proposal to (i) replace two of the five directors with unnamed directors designated by Mr. Icahn and potentially other large shareholders, (ii) change the Company's bylaws to require a supermajority vote on major acquisitions, equity issuances, changes to the Company's compensation arrangements or bylaws and (iii) to either terminate the short-term shareholder rights plan altogether, or increase its trigger threshold to 25%. The Board believes that changes to the composition of the Board of Directors and other major governance changes, as proposed by Mr. Icahn, should be made with the fully informed approval of a majority of all of the Company's shareholders, rather than at the behest of one. The Company's governing documents are designed to give shareholders significant input over matters such as these and to implement desired changes through a vote of all shareholders. For example, shareholders may demand special meetings at any time at the request of only 25% of the outstanding shares. Additionally, all SandRidge independent directors stand for reelection on an annual basis and shareholders have the ability to make proposals or nominate directors for consideration at the Company's annual meeting by following the procedures outlined in our bylaws. With respect to Mr. Icahn's proposals relating to the short term rights plan, the Board has decided to amend the plan to increase the trigger threshold to 15% and to eliminate the "acting in concert" language to ensure there is no unintended consequence that might discourage communications between shareholders on these important issues. Given the current shareholdings of our shareholder base, the Board believes that increasing the trigger threshold above 15% would primarily benefit Mr. Icahn in his efforts to take control of the Company without paying our shareholders a control premium, which the Board unanimously agrees is not in the best interests of all of our shareholders. In considering these changes, the Board notes that the short term rights plan is structured to automatically expire unless ratified by the shareholders at the upcoming 2018 annual meeting. Under the short term rights plan, shareholders also have the right to call a special meeting for purposes of terminating the short term rights plan at the request of 10% of the outstanding shares in the event a bidder submits a fully-financed tender offer for the Company's shares. In any event, the Board will readily consider a premium takeover proposal from any party, including Mr. Icahn. We understand we serve you at your discretion and we are committed to diligently representing your interests. We thank you for your support and look forward to continued improvement in performance and direct dialogue with you, as we and everyone at SandRidge continue to preserve and build lasting shareholder value."