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Entire Williams board caught in crosshairs of activist investor

🕐 3 min read

Less than two months after failing to oust Williams Cos.’s CEO and resigning as a director for the company, activist investor Keith Meister is broadening his attack on the pipeline giant. Now, he wants the entire board replaced.

Meister, who manages the hedge fund Corvex Management, is reigniting his fight with Williams’ leadership by nominating 10 Corvex employees to the board of the Tulsa, Oklahoma-based company, he said in an interview with CNBC on Monday. Meister said the nominees will act as placeholders until qualified candidates can be found.

Meister’s interview reveals for the first time since his resignation how he plans to circumvent Williams’ existing board with a shareholder vote. Together with Eric Mandelblatt, another activist investor, he’s been pushing for change at Williams since at least 2014. They both resigned after a meeting in which directors discussed the path forward for Williams after its $33 billion takeover by Energy Transfer Equity LP fell apart.

The deadline to submit names for Williams’s board is Thursday. Williams criticized Corvex’s plan as “unfortunate” since a proxy contest will be “distracting and costly.” The company said it plans to announce three new, independent board members in the coming weeks. Its shares have risen by more than 30 percent since Energy Transfer walked away from its plan to buy the company. They closed down 0.9 percent on Monday at $27.43 in New York.

Williams’ board has been in flux since early July when Meister, Mandelblatt and four other board members resigned. Mandelblatt said in his resignation letter that Chief Executive Officer Alan Armstrong was “incapable of maximizing shareholder value” and described his track record as “abysmal.”

“It’s very much a 1970s board, where there’s six directors whose qualifications I would question,” Meister said on CNBC Monday. “They’ve gotten on by being very loyal and supportive of a CEO whose record has failed to meet expectations.”

Meister said he’s looking for the “Sam Zell” of the energy pipeline industry to join Williams’ directors. Zell has established a reputation over the years as a brash, aggressive leader who sold his Equity Office Properties Trust for $39 billion at the top of the real estate market in 2007.

Meister has been a public critic of Armstrong and Williams’ remaining board members. He accused the latter on Monday of showing “blind loyalty to the status quo” and compared them to athletes that professional sports teams wouldn’t want in the early rounds of drafts — if at all.

Zell, Meister said, has put together one of the world’s top boards of directors in real estate. That came about after Corvex helped overthrow the board of an office owner called Commonwealth REIT in 2014 that ended with Zell being named chairman. “We’re asking shareholders: ‘Help us find the Sam Zell of the energy pipeline industry,”‘ Meister said in Monday’s interview.

Zell is the billionaire founder and chairman of Equity Group Investments, a Chicago-based investment firm. His office declined to comment.

Williams’s future — and Armstrong’s place in leading it — has come under scrutiny since Dallas-based Energy Transfer walked away from its takeover. Armstrong opposed the merger last summer while Mandelblatt and Meister lobbied other directors to support it. Armstrong said in an interview earlier this month that he’s excited to finally carry out his vision for the company after a “stressful” year.

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