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Activist believes natural gas player's dealmaking is a 'perverse' scheme to juice execs' pay

Hedge fund manager Barry Rosenstein on Monday turned up the pressure on EQT, accusing the natural gas driller of putting executive compensation ahead of shareholder value in its proposed acquisition of Rice Energy.

Rosenstein, founder and managing partner at Jana Partners, has come out against the $6.7 billion deal, which would create the nation's largest natural gas producer. Earlier this year, he said the transaction would cost more than the savings EQT would achieve by combining its exploration and production and pipelines businesses with Rice's operations.

On Monday, he alleged that EQT may be pursuing the "value-destructive acquisition" in order to enrich its executives.

"EQT's perverse compensation structure in fact incentivizes management to pursue this suboptimal, dilutive acquisition, no matter the cost to EQT shareholders," Rosenstein wrote in a letter to EQT's board of directors filed with the Securities and Exchange Commission.

Rosenstein says that the company's average oil and gas production over three years has a significant...