Invitations will soon be landing in the mailboxes of El Paso ( EP) shareholders. Selim Zilkha, one of El Paso's largest shareholders, is now formally asking others to join his fight against the company's current leadership. In a definitive proxy statement filed Monday, Zilkha laid out plans to replace El Paso's entire board of directors with a new slate including himself, and to name a veteran energy executive as the company's new CEO. Zilkha, who first announced his planned overthrow in mid-February, is now racing for support ahead of El Paso's annual meeting next month. El Paso filed its own definitive proxy Friday night, asking shareholders to support a board dominated by incumbents. El Paso maintains that sweeping boardroom changes would threaten both the company's turnaround plan and its financial condition. El Paso blames Zilkha, together with powerful shareholder Oscar Wyatt, for attempting to disrupt its recovery. "We believe that the Zilkha/Wyatt program offers no clear benefits to our shareholders, entails major risks and has many obvious detriments," the company said in a prepared release Monday. "Although more work remains to be done, we are confident that the company is moving in the right direction." El Paso says the alternative board has no clear business plan and complains that several of the replacement candidates have been retired from the energy industry for years. At the same time, the company cited recent asset sales and voluntary boardroom changes as evidence of its own progress. El Paso shares, up 2.8% to $7.66 Monday, have more than doubled from the lows they set when the proxy fight started brewing in February.
Zilkha fired new shots at the company on Monday, attacking both its business plan and its support for expensive "change-of-control" provisions that might frighten shareholders worried about a big hit to the corporate bank account. He criticized El Paso for an alleged lack of direction, saying the company has a "deplorable" tendency to abruptly change its focus and react to serious problems too late. He claims the company redefined its business plan as recently as this month and, overall, has sold off far more core assets than noncore assets in its struggle to recover.