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Icahn, SandRidge's war of words over board escalates as proxy firm weighs in

The fight between activist investor Carl Icahn and the leadership of SandRidge Energy Inc. for control of the Oklahoma City-based oil and gas producer has gotten increasingly nasty, with each side insulting the other's competence in new letters to shareholders.

Icahn, SandRidge's leading shareholder with control of 13.6% of the company's outstanding stock, has assembled a slate of seven nominees to take control of the board of directors. SandRidge's leadership has signaled a willingness to seat two of Icahn's nominees but remains steadfast in its support for the five incumbents running for re-election. In a June 5 release, SandRidge noted that independent proxy advisory firm Glass Lewis & Co. has sided with the company in saying that a vote for Icahn employees would be poor governance.

Icahn initiated the latest salvo of unpleasantries in a May 31 filing, when he mocked the current members of the board for their roles in the botched acquisition of Bonanza Creek Energy Inc. SandRidge's bid for Bonanza Creek was eventually withdrawn in the face of shareholder opposition, and Icahn now claims the board members are taking credit for pulling away from the deal.

"It is beyond ludicrous that the incumbent directors are now expecting stockholders to throw a parade in their honor for finally taking a few small, half-hearted steps to discharge their fiduciary duties," he said.

Icahn also mocked CEO William Griffin, board Chairman Michael Bennett and director David Kornder, sarcastically calling them "geniuses" because SandRidge hedged 2018 and 2019 oil production well below current oil prices. Icahn also addressed previously claims made by SandRidge management that he was attempting to eliminate all competitors in order to buy the company on the cheap by saying he has "not made any determination" on whether to make a bid.

SandRidge ignored Icahn's claim in the June 5 response, saying his latest letter to shareholders was "another blatant attempt to chill competition and gain control over our process and ultimately the company." It also called Icahn's track record in the energy industry "simply terrible," accusing the activist investor of having overseen the destruction of $27 billion in shareholder value in the six energy companies where he has agitated for change since 2010.

SandRidge's management called out Icahn for enlisting the company's former COO, Matt Grubb, as one of his advisors. Calling him former CEO Tom Ward's "right-hand man," the company said his record while at SandRidge was a disaster.

"From the time of SandRidge's initial public offering in November 2007 to Mr. Grubb's departure in March 2013, the company's share price decreased from $26.00 to $5.63, resulting in a negative 78% return and the destruction of more than $800 million of total shareholder value," the company said. "With a complete lack of irony or self-awareness, Icahn has accused our board of 'acting in the grand tradition of previous management and boards of SandRidge,' yet he has hired as a consultant and presumptive new management an actual member of the company's previous management."