New Wave Media

Williams Cos Inc's board stood by CEO Alan Armstrong and named a new chairman on Friday after six directors resigned following a failed attempt to unseat him.

 

Williams appointed director Kathleen Cooper as the company's new chairman, adding in a news release that Armstrong is the "right Chief Executive Officer for Williams."

 

Two of the directors who stepped down filed responses of their own on Friday, with one promising to be more effective driving changes at Williams from outside the board.

 

The U.S. oil pipeline company now finds itself with nearly half of its board wiped out, its business under pressure from depressed energy prices and without a public takeover partner for the first time since September 2015.

 

Thursday's resignations from the company's 13-member board came a day after Energy Transfer Equity walked away from its more than $20 billion deal to buy Williams after months of rancor between the rival pipeline companies.

 

The six directors resigned after failing to obtain majority support on the board to fire Armstrong, Reuters reported on Thursday.

 

Former Chairman Frank MacInnis and directors Ralph Izzo, Eric Mandelblatt, Keith Meister, Steven Nance and Laura Sugg disagreed with the direction of the board and resigned, the company said, adding that it will evaluate the appropriate size and composition of the board. Williams' stock was down 4.7 percent at $20.62 on Friday.

 

Meister is the founder of hedge fund Corvex Management and Mandelblatt runs Soroban Capital Partners, which collectively own 8.4 percent of Tulsa, Oklahoma-based Williams.

 

The two showed no signs of exiting their Williams positions amid the turmoil.

 

Meister, Williams' third-largest shareholder, explained his resignation in a regulatory filing on Friday, saying that remaining a director would send the wrong signal that he supported Armstrong.

 

"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," Meister said in a letter to the board.

 

Mandelblatt, whose fund is the sixth-largest shareholder, said "it has unfortunately become evident that the CEO of the Company, Alan Armstrong, is incapable of maximizing shareholder value and, instead, is primarily focused on maintaining his role as CEO."

 

Not all Williams investors share that view.

 

"Alan is a fine choice, there has been a lot of uncertainty in the company amongst the employees and Alan is a stabilizing force," said Rob Thummel, a portfolio manager at Tortoise Capital Advisors LLC, the company's tenth-largest shareholder.

 

Still, shareholders who want representation on the new board have an opportunity when Williams schedules its annual meeting, which was delayed by the ETE negotiations. Williams bylaws also allow shareholders to nominate directors outside of the annual meeting process, through a written consent process, according to its proxy statement.

 

In response to Corvex's and Soroban's filing a Williams representative said in a statement: "The Board and management look forward to speaking with stockholders in the coming weeks to hear their views and outline the Company's strategic plan for the future."