Williams Averts Proxy Battle With New Board Appointments

  • Operator appoints former Occidental, Baker Hughes executives
  • Williams now in ‘best position’ for shareholders, Corvex says

Williams Cos. headed off a proxy fight with activist shareholder Corvex Management LP after the pipeline owner announced renewed plans to overhaul its board.

The company appointed Stephen Chazen, former chief executive officer of Occidental Petroleum Corp., and Peter Ragauss, an ex-chief financial officer of Baker Hughes Inc., to its board, according to a statement Monday. It may name two more independent directors before the company’s November annual meeting while three directors who’ve served for several years won’t run again, Williams said. 

Corvex immediately applauded the moves, saying in a separate statement that it’ll no longer solicit proxies after earlier nominating 10 new directors. “Corvex looks forward to working with the newly-constituted board to unlock the significant value inherent in the company,” Keith Meister, managing partner, said in the statement.

The reshuffling marks Williams’ latest step forward following the collapse of a deal for Energy Transfer Equity LP to buy Williams for about $33 billion -- a transaction Meister had long supported and Williams Chief Executive Officer Alan Armstrong had long opposed. Since then, Armstrong’s plotted a course for the company as a standalone and moved to focus its operations on transporting natural gas. That’s included the sale of Canadian assets and an announcement that it may sell its stake in a Louisiana complex that produces natural-gas liquids.

Rebuffed Offer

Williams rose 0.6 percent to $30.51 at 10:20 a.m. in New York trading. The shares are up 46 percent since Energy Transfer walked away from the deal.

In August, following reports that Williams had rebuffed a takeover bid from Enterprise Products Partners LP, Meister initiated a proxy battle aimed at replacing all six of the remaining Williams directors. He compared them to inferior athletes and said they’re unwilling to disagree with Armstrong.

If Williams appoints two new directors by November -- which it said is its "goal" in Monday’s statement -- the newly constituted governing body will consist of 11 members, seven of whom will have been added since the Energy Transfer deal fell apart.

Such a board will probably be more willing to "engage in the most appropriate actions" to enhance shareholder interests, TJ Schultz, an analyst at RBC Capital Markets LLC, said in a note to clients on Monday. That could include re-engaging in merger talks with Enterprise Products Partners. “We continue to like WMB regardless of a standalone plan or as a potential takeout," Schultz said.

Williams added the first three new directors on Aug. 29, all current or former executives at other energy companies. They included former American Midstream Partners LP CEO Stephen W. Bergstrom, Pioneer Natural Resources Co. CEO Scott Sheffield and PPL Corp. CEO William H. Spence.

The three took “a leadership role in discussions with Corvex which resulted in the announced plan to enhance the board’s composition,” Meister said.

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