EQT Corp CEO rejects Rice Energy board manipulation lawsuit

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(Reuters) – The chief executive of EQT Corp has rejected allegations in a lawsuit filed on Thursday by a founder of Rice Energy Inc to prevent the oil and gas producer from “manipulating” the outcome of its forthcoming board election.

Toby and his brother Derek Rice were part of the founding team of Rice Energy, which was bought by EQT in November 2017. They are pushing for a change in EQT’s strategy and replacement of its board.

Toby, in a statement, alleged that EQT might name Rice nominees in its proxy statement against their wishes, giving an impression that his nominees support the company’s current board. Warring parties commonly send separate proxy cards, he added.

“We believe both sides agreeing to use a universal proxy card would reflect best-in-class corporate governance, as the most qualified directors would be elected regardless of which proxy card a shareholder voted on,” said Toby Rice.

The Rice brothers had nominated nine candidates to the EQT board, which currently has 12 directors.

In an interview with Reuters, EQT CEO Rob McNally insisted there was no attempt by the board of the company to manipulate the nomination process, and said it would file its preliminary proxy material in the “next few weeks.”

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“This is something timed to distract the market from a good set of results from the company,” McNally said, referring to EQT’s first-quarter earnings released earlier on Thursday.

EQT’s shares were trading 2.1% lower at mid-afternoon.

Despite becoming the largest U.S. natural gas producer when it acquired Rice Energy, shares of Pittsburgh-based EQT have underperformed.

The Rice brothers blame EQT management for not fulfilling the Appalachian-focused firm’s potential, while the company has insisted the duo’s projections are inflated and based on outdated market conditions.

Shares of EQT have lost 42% of their value since its Rice Energy acquisition in November 2017, while the broader S&P 500 Energy index has declined only about 3% in the same period.

Reporting by Nishara Karuvalli Pathikkal in Bangalore and David French in New York; editing by Shounak Dasgupta, James Emmanuel and Richard Chang