Anadarko board faces scrutiny amid $38 billion bidding war

Anadarko Petroleum Corp.’s market value has soared 56 percent since a bidding war for the American shale driller kicked off two weeks ago. Yet the company’s directors have managed to step on the toes of almost every player involved.

Anadarko reopened talks with Occidental Petroleum Corp. on Monday after the board sided with investors who said the $38 billion offer was likely better than the agreed-upon deal with Chevron Corp. Though Occidental’s been making a run at Anadarko for more than a year, Chevron’s pursuit began in earnest just a few months ago. If Anadarko officially deems Occidental’s bid “superior,” Chevron will be forced to sweeten its offer or drop out altogether.

In a letter published April 24, Occidental Chief Executive Officer Vicki Hollub criticized Anadarko for agreeing to the Chevron deal’s $1 billion breakup fee “without even picking up the phone to speak to us” about two separate proposals the same week that were at a “significantly higher value.”

“It is messy. They jumped on the Chevron offer, leaving this one mystifyingly unaddressed,” said Craig Pirrong, director of the Global Energy Management Institute at the University of Houston. “The board should have been happy to have multiple bidders rather than stiffing one and focusing exclusively on the other.”

Shareholders haven’t been quiet about their frustration, either. Investors including Janus Henderson and Miller/Howard Investments Inc. said in interviews that they didn’t understand why Anadarko would sign with Chevron when a higher offer was available.

That time Occidental’s corporate jet flew to Warren Buffett’s hometown

New York-based D.E. Shaw urged Anadarko to open up its sale process, people familiar with the matter said last week.

Anadarko did not immediately respond to a request for comment. In an earlier statement, the company said Occidental’s most recent bid reflected a “significant improvement” compared to previous offers.

Anadarko’s board has a few heavyweights — Valero Energy Corp. CEO Joe Gorder, former Perella Weinberg Partners Capital Management LP CFO Alexandra Garbers Pruner and David Constable, ex-CEO of Sasol Ltd. But otherwise, the 13-member board lacks major figures from the oil and gas world.

Directors’ pay, though higher than the S&P 500 average, is largely in line with Chevron and Occidental, according to data compiled by Bloomberg.

Still, Anadarko’s directors faced scrutiny even before Occidental announced its offer, after they sweetened executive pay packages the day before the Chevron deal was announced. The tweaks eliminated a provision that would have reduced CEO Al Walker’s potential payout because he hasn’t yet reached age 65 and included a vow to cover excise taxes on golden parachutes.

Walker, 62, also serves as the chairman of the board.

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