Overview#
Gran Tierra Energy Inc. experienced a significant drop in its stock price, falling 10% on Wednesday. This decline followed the resignation of four board members due to disagreements regarding an ongoing investigation by the company's Audit Committee.
Board Resignations#
The resignations took place on March 11 and 12, with Evan Hazell, Sondra Scott, David Smith, and Brad Virbitsky stepping down. Following their departures, the board reduced its size from nine to five directors. Each of the resigning members cited disagreements with the majority of the Audit Committee concerning the management of an independent investigation prompted by an anonymous complaint.
Disagreements Over Investigation#
The departing directors were particularly opposed to the Audit Committee's decision to terminate the independent legal counsel that was hired to conduct the investigation. David Smith, who was the Chair of the Audit Committee, expressed strong disagreement in his resignation letter, labeling the decision as a "fundamental error in corporate governance." Similarly, Sondra Scott voiced her concerns about ending the independent investigation, despite recommendations from external advisors to maintain its independence.
Nature of the Complaint#
Gran Tierra Energy clarified that the anonymous complaint does not involve any allegations of fraudulent activity or inaccuracies in its financial statements. The Audit Committee has instructed management to continue investigating the matter and to seek external legal counsel and other advisors as needed. Before their resignations, the board members held significant roles, including leadership positions in various committees focused on health, safety, governance, and auditing.