Fed up with a lack of action on their plans to drive more value at EQT Corp., shareholders Toby and Derek Rice on Thursday said they intend to nominate nine candidates to the board who would back their vision.
Four of the candidates had served on the Rice Energy Inc. board before it was acquired by EQT in an $8 billion deal that closed in late 2017. The Rice brothers also said Thursday additional information and a preliminary proxy statement would be issued in the near future ahead of the annual shareholder meeting scheduled for July 10.
“We believe a comprehensive solution is required to effect the fundamental course correction needed to deliver full value to shareholders,” Toby Rice said. “This approach stands in stark contrast to EQT’s pursuit of incremental changes to the status quo. Our solution starts with substantial changes at the board level to oversee our plan to improve operational performance and transform EQT into the lowest-cost gas operator in the country.”
The announcement is just the latest salvo in a proxy fight that’s been brewing since last year, when the brothers stepped forward to say EQT was underperforming. Since then, they’ve pitched investors on how they can better cut costs and generate higher returns under a plan that would find current CEO Robert McNally ousted and replaced by Toby. The brothers gained control of about 3% of EQT after the sale of the family business.
EQT management and the board have largely dismissed the proposals, and the company reiterated Thursday that its operational plans for this year and beyond are better suited to a company of its size, again balking at the latest announcement. The company has faced intense pressure to perform over the last year-and-a-half, a period in which it became the nation’s largest natural gas producer after the Rice Energy acquisition, spun-off its midstream business and overhauled the management team.
Management noted Thursday the board now consists of 12 directors, 10 of whom are independent. Four of the directors were appointed last year. To further allay investor concerns following the top-down changes at the company, EQT earlier this month appointed Gary Gould as COO. He most recently served as senior vice president of production at Continental Resources Inc. and has experience working in Appalachia, where EQT operates, after having formerly worked with Chesapeake Energy Corp. and others.
The tit-for-tat continued Thursday as the brothers accused EQT of attempting to create an “uneven playing field” by requiring that the Rice nominees consent to being named in EQT’s proxy materials as a condition of submission. The brothers argued that the nominees should only be included in the Rice team’s proxy materials or on a universal proxy card. They also called out the company for scheduling the shareholder meeting in July instead of April as it has been in the past.
“In the Rice team’s view, EQT’s actions, like its decision to hold its annual meeting in July rather than in April as it has for decades, are attempts to manipulate the corporate machinery to gain a tactical advantage instead of giving shareholders the opportunity to promptly and fairly have their voices heard.”
The Rice’s nominees include Lydia Beebe, a principal at consultancy Libb Advisors LLC; Lee Canaan, founder of the investment firm Braeburn Capital Partners LLC; Jay Graham, CEO of Spur Energy Partners; Kathryn Jackson, director of energy and technology consulting at KeySource Inc., and a former Rice board member; Mark Leland, board member at Altus Midstream Co.; John McCartney, board member at Huron Consulting Group, and a former Rice board director; and Hallie Vanderhider, managing director of SFC Management LP.
The nominations also include Toby Rice, former COO of Rice Energy, and Daniel J. Rice IV, who served as CEO and who currently sits on the EQT board. They also served on the Rice board.
EQT said its corporate governance committee would review and consider the director candidates and make a formal recommendation about the nominees in its definitive proxy statement.
The company’s stock was down nearly 2% Thursday afternoon, trading around $20.43/share.