Corvex Calls Off Director Fight After Williams Shakes Up Its Board

Natural gas operator Williams (WMB) on Monday again reshuffled its board by removing three directors and installing two new ones including the former CEO of Occidental Petroleum in a move that led activist investor Keith Meister of Corvex Management to cancel a change-of-control proxy contest he had pending for an annual meeting scheduled for November. 

"As we have indicated, Williams is committed to maintaining a world-class board of directors," Kathleen Cooper, chairman of the Williams board, said in a statement.

In addition to the former CEO of Occidental, Stephen Chazen, Williams added Peter Ragauss, former chief financial officer of Baker Hughes and current director at Apache Corp. Also Williams said it is looking for two additional candidates to join its board before the 2016 annual meeting scheduled for Nov. 23, which would bring the size of the board to eleven members.

The move is in response to Meister, who earlier this month sent a letter to Williams pleading with three recently-installed Williams board members to form their own strategic review committee with investment bankers retained as advisers. Meister, who launched his change-of-control proxy fight at the energy company in August, urged the three incumbent directors to hire and meet with investment bankers with no management present. And while there was no public response from those three directors the changes announced on Monday appeared to be enough to persuade Meister to call of his context.   

"I commend the three new Directors ... for taking a leadership role in discussions with Corvex which resulted in the announced plan to enhance the board's composition," Meister said in a statement. "I believe the changes to the board announced today... will put the company in the best position to ensure a renewed focus on shareholder interests and the enhancement of shareholder value."

The new high-profile company-backed directors - and two additional board members to come - installed Monday suggest that Williams and Corvex engaged in behind-the-scenes negotiations to identify what board changes would be sufficient to have Meister call off his director-election contest.  The goal also was to convince other shareholders that the company has a board in place is looking out for their interest when it comes to M&A possibilities and long-term shareholder value.

The latest director shuffle also come after Enterprise Products Partners LP (EPD) confirmed Sept. 8 that it withdrew an indication of interest in combining with the natural gas pipeline operator.

Meister and five others resigned from Williams' board in June over disagreements with the rest of the board and company management, including CEO Alan Armstrong, who was opposed to a potential deal that would have had an affiliate of Energy Transfer Equity LP (ETE)  acquire Williams.

Meister said earlier this month that he was skeptical that Williams board constructively engaged Enterprise Products and he brushed off concerns raised in reports that suggested Enterprise's bid for Williams was for less than a 10% premium. He said he didn't know anything about the terms Enterprise was offering - but noted that a combination of that sort was the right approach.

The activist investor argued that the three directors Williams added in August have experience and qualifications that are appropriate for the board. The appointees include Stephen Bergstrom, director and former president and CEO of oil and gas infrastructure provider American Midstream Partners LP (AMID) ; Scott Sheffield, chairman and CEO of oil and gas producer Pioneer Natural Resources Co. (PXD) ; and William Spence, chairman, CEO and president of utility PPL Corp. (PPL) . 

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