By Svea Herbst-Bayliss and David French
BOSTON (Reuters) - Brothers Toby and Derek Rice are on course to win control of EQT Corp's board of directors two years after having sold their own company, Rice Energy, to the natural gas producer, people familiar with the matter said on Tuesday.
Enough votes have been cast for the Rice brothers to defeat EQT's slate of directors and take over the board in what has become the most prominent fight for control of a board since Starboard Value waged and won its proxy contest at Darden Restaurants Inc (NYSE:DRI) in 2014, the sources said.
Two sources said that the pair is expected to have won seven seats on the 12-member board.
Representatives for EQT and the Rice brothers did not immediately respond to requests for comment.
At stake is control of the largest natural gas producer in the United States. The Rice group has waged an eight-month campaign against the current EQT board and management, claiming they have mismanaged the company since its 2017 takeover of Rice Energy.
Investors can vote until EQT's annual meeting begins in Pittsburgh at 8 a.m. on Wednesday. But with big investors ranging from T.Rowe Price to the California Teachers Retirement System pension fund having already thrown their support to the brothers, sources say their win is all but assured.
Toby and Derek Rice, two of the three brothers who sold Rice Energy to EQT in 2017, have been frustrated with operations at EQT and decided their only recourse was to press ahead with a proxy contest and plans to push for Toby to replace Robert McNally as EQT's chief executive officer.
Toby Rice told Reuters last month that he needs more influence on the board to create changes like cutting costs and bringing in new executives for key parts of the business after EQT let most of Rice Energy's senior management go after the merger.
EQT's stock price tumbled nearly 59% since the Rice merger was completed, sparking worry among big investors and at least one influential proxy advisory firm.
Besides T.Rowe Price, investors D.E. Shaw and Kensico Capital Management as well as Elliott Management have publicly said they are backing the brothers, giving them more than 21% of the vote.
CalSTRS, whose votes often carry clout with other investors, reported on its website that it cast its vote for the brothers' slate and for five current board members who were unopposed.
Similarly proxy advisory group Institutional Shareholder Services threw its weight behind the Rice group.
Besides Toby, the slate includes Daniel Rice, a third brother, who was the CEO of Rice Energy and is a current EQT board member, plus other executives with industry experience.