(Corrects number of directors who voted for Rudd in 5th paragraph to seven instead of six)
By Svea Herbst-Bayliss and Greg Roumeliotis
June 15 (Reuters) - Hedge fund Starboard Value LP managing member Peter Feld stepped down from AECOM's board in protest over the selection of a new chief executive that sidestepped a search process that he oversaw, the U.S. engineering company disclosed on Monday.
Feld quit AECOM's board after it held a meeting without a previously disclosed agenda to vote on the promotion of chief financial officer Troy Rudd to CEO, according to Feld's resignation letter dated June 12 that the company published on Monday.
Members of a CEO search committee of AECOM's board were still engaging with "highly qualified candidates" and could have concluded their search within weeks, when the company's board decided to pick Rudd to succeed CEO Michael Burke in October, the letter stated.
"Since I cannot, and will not, support the board practices that culminated in this selection, I am resigning from the board with immediate effect," Feld, who chaired the CEO search committee, wrote in the letter.
Feld and two other directors who joined AECOM's board as part of a settlement in November that averted a proxy contest voted against Rudd's appointment. They were defeated in the vote by seven AECOM directors, including Burke, who backed Rudd.
Starboard, an activist investor, was open to Jacqueline Hinman, the former CEO of engineering firm CH2M HILL Companies who joined AECOM's board as part of the settlement, becoming AECOM's new CEO, according to people familiar with the deliberations. Hinman, however, dropped her candidacy after failing to get enough backing on AECOM's board, the sources said.
A strong external candidate that the CEO search committee was considering withdrew because of a professional conflict, according to Feld's letter. The identify of that candidate was not disclosed.
Rudd removed his name from consideration for the CEO role earlier in the process, the letter said. The search committee wanted the new CEO to have experience leading a large business, a qualification that Rudd did not meet based on his finance background, according to the letter.
Rudd rejoined the CEO search process six weeks ago, one of the sources said. His promotion was seen by the majority of AECOM's board as providing certainty to the market and helping retain talent, including the head of AECOM's European business, Lara Poloni, who was considering leaving for another company, according to the sources.
Starboard hinted at a new board challenge against AECOM when directors are up for re-election next year. "Starboard remains a large shareholder of AECOM, and we reserve our rights to take any action we deem necessary to continue to represent the best interests of all shareholders," Feld wrote.
AECOM and Starboard declined to comment. (Reporting by Svea Herbst-Bayliss in Boston and Greg Roumeliotis in New York; Editing by Cynthia Osterman)