Rice Brothers Take Control Of EQT Board In Proxy Fight

[Editor's note: This story was updated at 3:22 p.m. CDT July 10.]

Toby and Derek Rice have won control of EQT Corp.’s board of directors on July 10, roughly two years after the sale of the Rice brother’s own company, Rice Energy, to the shale gas giant.

Based on preliminary voting results of the company’s annual meeting, EQT shareholders elected all seven Rice-nominated directors as well as the five nominees supported by both EQT and the Rice team, the groups said in a joint release on July 10.

All 12 elected directors received more than 80% of the votes cast at the annual meeting.

As a result, Toby Rice was later named president and CEO of EQT on July 10. He succeeds Robert McNally, who has served as the company’s top executive since August 2018. The move will put an end to a nine-month proxy battle led by Rice against EQT. 

McNally said in a statement on July 10: “I’d like to thank employees across the organization for their outstanding work and dedication to EQT as well as our directors for their counsel and dedication. EQT is a unique company with terrific assets, and I wish EQT and the Rice team great success in the future.”

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EQT acquired Rice Energy in 2017 for roughly $8.2 billion in what was the most expensive U.S. shale merger of that year. The purchase price, consisting of stock and cash plus the assumption of debt, represented a 37% premium on Rice’s share price at the time.

Through its combination with Rice Energy, EQT’s position in the Marcellus Shale grew to about 1 million total net acres. The company also acquired Rice Energy’s midstream business in the Appalachian Basin.

Following the close of the merger in November 2017, the Rice brothers have keenly watched EQT’s performance in part because their fortunes are tied to the company as the deal included a payment of $1.3 billion in cash plus $5.4 billion in EQT equity.

Consequently, Toby and Derek Rice, two of the three brothers who formed Rice Energy, started to voice their frustrations with EQT late last year over its operational results. In particular, the Rice brothers claimed the current EQT management had disregarded the blueprint inherited from the merger that had led to Rice Energy’s operational success—its people, technology and planning.

As the two Rice brother’s concern continued to grow, they eventually began to call for a complete transformation of EQT, which included replacing the majority of EQT’s board and installing Toby Rice as CEO. The resulting proxy fight did not include Daniel Rice, former CEO of Rice Energy, as he had joined the EQT board following closing of the merger.

Now set to successfully take the helm of EQT, Toby Rice said he is committed to a smooth transition in “realizing EQT’s full potential.”

“Now is the time to put this proxy contest behind us and come together as one team to transform EQT into a technology-enabled, sustainable energy producer,” Rice said in a statement on July 10. “There is a lot of work to be done, and we look forward to rolling up our sleeves and working closely with EQT’s talented employees to execute our plan.”

EQT’s reconstituted board will be comprised of Lydia Beebe, Philip Behrman, Lee Canaan, Janet Carrig, Kathryn Jackson, John McCartney, James McManus II, Anita Powers, Daniel Rice IV, Toby Rice, Stephen Thorington and Hallie Vanderhider.

The new board elected John McCartney on July 10 to serve as EQT’s chairman. McCartney had previously served as a director of Rice Energy from 2015 until its acquisition by EQT in 2017.

“EQT shareholders have spoken and the vast majority support fundamental change at EQT. ... I look forward to working together with my fellow directors and the management team as we work to chart a new path for EQT,” McCartney said in a statement.

As part of the transformation process, the board also created an evolution committee dedicated to reconstructing the company’s organization, technology, and operations. The committee will be chaired by Toby Rice and include Daniel Rice IV, Derek Rice, Kyle Derham, Will Jordan and members of EQT’s leadership team.

Emily Patsy can be reached at epatsy@hartenergy.com.