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EQT's "perverse" comp structure real reason for Rice takeover, Jana says

Published 08/15/2017, 10:04 AM
Updated 08/15/2017, 10:04 AM
© Reuters.  EQT's "perverse" comp structure real reason for Rice takeover, Jana says
  • Jana Partners accuses EQT Corp. (EQT -2.1%) management of pursuing what it calls a money-losing acquisition of Rice Energy (RICE -2%) because of a “perverse” executive compensation scheme.
  • In a letter to the board yesterday, Jana's Barry Rosenstein questioned why EQT would pursue the proposed $6.7B Rice deal rather than spin off of its pipeline assets, a move Jana had advocated.
  • “A review of EQT’s compensation policy provides at least one answer,” Rosenstein wrote. “EQT’s perverse compensation structure in fact incentivizes management to pursue this suboptimal, dilutive acquisition, no matter the cost to EQT shareholders.”
  • Rosenstein says the Rice acquisition would raise EQT’s cash bonus pool by ~$130M from 2018 to 2021, creating a “windfall” for senior management.
  • Now read: Here's How The Lean Long-Term Growth Portfolio Is Investing For The Future In Energy


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