In the wake of a failed merger with Energy Transfer Equity LP (ETE), an apparent attempt to oust CEO Alan Armstrong at the Williams Companies Inc. has failed and led to the resignation of six of its 13 board members, including the chairman.

In a statement Friday, Williams said Frank MacInnis stepped down as board chairman for “personal reasons” and that Kathleen Cooper, a current director and audit committee member has been appointed by the board to replace MacInnis as chairman.

The company said five additional board members — Ralph Izzo, Eric Mandelblatt, Keith Meister, Steven Nance and Laura Sugg — had “disagreed with this strategic direction” and decided it was “in the best interests of stockholders to resign.” All six of the resignations were effective immediately.

The resignations come two days after ETE said that it was terminating its merger agreement with Williams (see Daily GPI, June 29).

According to documents filed with the U.S. Securities and Exchange Commission (SEC), all six of the board members to resign were part of an 8-5 bloc that voted in favor of the ETE merger at a board meeting last September. Armstrong, Cooper and three other board members opposed the merger.

In a letter filed Friday with the SEC, Meister said Williams’ board met Thursday to discuss the company’s future. He said that he and the other five aforementioned board members supported replacing Armstrong as CEO, but seven board members refused.

“There was discussion of the substantial business and operational failures that have occurred over the last five years on Alan’s watch as CEO, many of which I, Eric Mandelblatt or other directors have often raised in the past,” Meister said. “I did not hear a credible defense of Mr. Armstrong’s track record of business performance…

“I can only conclude that those directors who were unwilling to support this change have acted more out of a personal loyalty to Alan Armstrong, rather than permitting the facts of his performance to take them to the correct answer.”

In a separate letter filed with the SEC, Mandelblatt said Armstrong “is incapable of maximizing shareholder value and, instead, is primarily focused on maintaining his role as CEO….I cannot serve on a board that continues to empower a CEO with an abysmal operational and financial track record, and who, in my opinion, lacks the necessary judgment and character to lead the company forward.”

Meister and Mandelblatt were board members representing hedge funds Corvex Management LP and Soroban Capital Partners LP, respectively. According to SEC documents, Corvex holds about 41.7 million shares (5.6%) of Williams, while Soroban holds 21 million shares (2.8%).

Williams said it is retaining Armstrong as CEO after the board “thoroughly evaluated the company’s leadership structure and determined [Armstrong] is the right CEO for Williams as the company works to continue enhancing stockholder value.”

The company said it also plans to evaluate the size and composition of its board of directors, and would unveil additional details of its strategic plans over the next few weeks.

Armstrong was appointed CEO and MacInnis became chairman of the board at the beginning of 2011, following the retirement of Steve Malcolm as CEO (see Daily GPI, Oct. 14, 2010).

ETE scuttled the proposed merger with Williams after a Delaware judge ruled ETE did not violate the merger agreement. Specifically, ETE failed to receive an opinion from its tax attorneys with the firm Latham & Watkins LLP on a transaction between Energy Transfer Corp. LP (ETC) and ETE (see Daily GPI, June 24). Williams has since filed an appeal to the Delaware Supreme Court.

According to preliminary results, more than two-thirds of Williams’ shareholders voted for the proposed merger with ETE last Monday (see Daily GPI, June 27).

The proposed merger was initially valued at $37.7 billion but the collapse in commodity prices reduced its value to about $20 billion (see Daily GPI, March 24). Investors have since soured on midstream master limited partnerships, and ETE’s shareholders had doubts about the merger (see Daily GPI, Feb. 25; Oct. 22, 2015).

Last month, Williams said the original projection that a merger with ETE would create more than $2 billion in annual synergies by 2020 was inaccurate, and they now are valued at about $126 million (see Daily GPI, June 20; Sept. 28, 2015). Nevertheless, Williams’ board of directors offered its shareholders a special dividend of 10 cents/share to approve the merger.