Keith Meister, who runs hedge fund Corvex Management, said on Monday that he planned to nominate candidates to replace pipeline company Williams Cos (wmb) entire board.
Meister said his 10 nominees would all be Corvex employees who would be replaced by independent directors that the hedge fund recruits shortly after taking their positions.
“This will provide a path for shareholders to take this company back from six unqualified independent directors,” Meister said in an interview on Monday. Corvex is Williams’ fourth-largest shareholder.
Meister said he had worked unsuccessfully to convince the company to adopt a plan to place a majority of new independent directors on the board by May 2018. He was also unhappy with reports that the company had not engaged with rival Enterprise Products Partners (epd) LP when the larger pipeline company approached Williams with a potential takeover bid earlier this summer.
Meister said he planned to release the names on his slate before Williams’ Thursday deadline for nominating directors. The annual meeting will be held on Nov. 23.
In response to Meister’s criticism, Williams pointed to its previously announced plan to add three new independent directors, who have yet to be named by the company.
“Given the events of the last year, it is unfortunate that Corvex intends to launch a distracting and costly proxy contest while Williams is moving forward with its plan to identify new, highly qualified and independent directors,” the company said in a statement.
Williams said it had told Corvex that the board would consider the hedge fund’s placeholder board plan.
Shares of Williams were down 2 cents at $27.66 in afternoon trading.
Corvex and another top shareholder, Soroban Capital Partners, previously held board seats and have agitated for change at the company for years.
The two hedge funds were key proponents of Williams’ failed deal to be bought out by rival Energy Transfer Equity LP (ete). After the takeover collapsed in June, nearly half of Williams’ board, including Meister and Soroban’s Eric Mandelblatt, resigned following a failed attempt to oust Williams’ Chief Executive Officer Alan Armstrong.
Corvex’s strategy is explained in part because of the deadline it faced between the time Meister stepped down from the board on June 30 and Thursday’s nomination deadline to propose directors.
“I have never heard of electing directors who will then resign,” said University of Delaware finance professor Charles Elson, who follows corporate governance. “That is highly unusual.”
A Delaware judge ruled in June that Energy Transfer could terminate its deal to buy Williams over tax issues. The deal had been in doubt for months, with Williams suing Energy Transfer, accusing the company of breaching the terms of their merger in trying to back out.
Energy Transfer had become unhappy with the deal as oil’s prolonged downturn put many of its and Williams’ customers—major oil and gas producers—in jeopardy, driving down the value of both companies.
Since that deal fell apart, Tulsa, Oklahoma-based Williams has laid out plans to move forward as a stand-alone company while investing more than $1.5 billion in its master limited partnership, Williams Partners LP. Williams and Williams Partners have taken steps to sell assets to reduce their debt loads.
Williams’ shares are up around 27 percent since the resignation of nearly half its board June 30. Dow Jones’ U.S. Pipeline index is up around 10 percent over the same period.
Meister first announced his plans in an interview on CNBC on Monday.