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Reeling from the failure of its proposed merger with Energy Transfer Equity LP, Williams Cos. Inc. has turned to a former U.S. Department of Commerce official and chief economist of ExxonMobil Corp. (NYSE: XOM) to serve as its new chairman.
Kathleen B. Cooper, who served as undersecretary for economic affairs during the administration of President George W. Bush, joined the Williams board in 2006. Most recently, she took over as chairman on July 1 following a bitter struggle among board members over the company’s direction as well as the retention of Alan Armstrong as president and CEO.
The Armstrong forces won in a 6-6 deadlock; and six of the directors, including former Chairman Frank MacInnis, stepped down. MacInnis left for personal reasons, the company said, but two activist members—Keith Meister of Corvex Management and Eric Mandelblatt of Soroban Capital Partners—issued withering letters of resignation with their departures.
“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,” Mandelblatt wrote in a letter filed with the Securities and Exchange Commission. “I retain all options going forward to protect shareholders from further value destruction.”
Meister also hinted that he would continue to advocate for change in his new role outside the board.
“Ironically, given the current CEO and board leadership, I believe I will be more effective from outside the company than within, and will seek to protect our interests and the interest of other shareholders from outside this diminished boardroom,” he wrote.
Corvex and Soroban together own 8.4% of Williams.
Other board members who joined Meister and Mandelblatt in leaving the board were:
- Steven Nance, president of Steele Creek Energy;
- Laura Sugg, former senior executive at ConocoPhillips (NYSE: COP) ; and
- Ralph Izzo, chairman of Public Service Enterprise Group.
The board’s statement fully supported Armstrong.
“The board of directors has thoroughly evaluated the company’s leadership structure and determined that Alan Armstrong is the right chief executive officer for Williams as the company works to continue enhancing stockholder value,” the company said in a statement.
Energy Transfer walked away from the deal on June 29, citing a section in the merger agreement that allowed termination of the deal if a legal opinion stating the transaction would be tax-free could not be secured. Williams filed an appeal with the Delaware Supreme Court on June 27, asking it to overturn the Delaware Court of Chancery’s June 24 ruling that allowed Energy Transfer’s withdrawal.
When announced on Sept. 28, 2015, the merger of Energy Transfer and Williams was valued at about $38 billion. The value had tumbled to about $20 billion by the time Energy Transfer pulled the plug.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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