Flawed, One-Sided Recommendation Does Not Reflect Overwhelming Support Hess Transformation Plan Has Received from Shareholders and Independent Wall Street Analysts
Glass Lewis Undermines Its Own Analysis; Finds Elliott Compensation Scheme Compromises Independence of Dissident Slate, Creates Divided Board
Hess Urges Shareholders Elect All Hess’ New, Independent Director Nominees on the White Proxy Card
The Company stated: “Without meeting or even talking to Hess,
“Glass Lewis has done a disservice to its clients. Its recommendation
inexplicably discounts the value creation potential of our
transformation plan and the world class asset base that the Hess Board
has assembled, including its leading position in the Bakken.
Hess notes that the overwhelming majority of
- With the steps taken over the past three years management has revealed a sound strategy that we believe is tough to beat... Hess is executing a strategy we believe underpins a material release of value.
We take management’s side in terms of the future course of the
company.... we do not think breaking up the company into an onshore
resource player (Hess Resources) and international, mostly offshore,
entity (Hess Remainco) is the best way to generate value.
HES is the best-performing large E&P, up 34% YTD, compared with 8%
for peers and 11% for the
S&P500. The shares are trading 4% off their 12-month high and 79% above the low, compared with 11% and 36% for peers and 1% and 25% for the S&P500.
The Company added, “Hess has nominated a slate of all new, independent director nominees. These directors would be assets to any boardroom across corporate America, and are ideally suited to be directors at Hess. They have impeccable credentials and are the right team to objectively oversee the execution of Hess’ market-endorsed transformation plan. We urge Hess shareholders to vote for all of our new, independent, highly qualified director nominees who will continue our transformation into a pure play E&P company that will drive increased returns for all Hess shareholders.”
Hess notes that
…[w]e are strongly opposed to the Dissident's compensation arrangements and maintain such agreements introduce a troubling and, in our view, wholly unnecessary potential for board room conflict…
The Dissident may not revoke these payments at a later date if, by chance, it becomes unsatisfied with its Nominees. While this may provide the appearance that the Dissident Nominees are not beholden to Elliott's interests, we nevertheless find these agreements problematic. In particular, contests of this nature already introduce significant risks associated with the prospect of a fractured boardroom, the potentially adverse impact of which we believe shareholders must seriously consider as part of any final vote determination. By extension, we find agreements of this nature, which essentially establish a two-tiered compensation structure for the same oversight role, offer little chance of reducing the foregoing risks and may, in fact, foment further discord between the incumbent board members and Dissident nominees.
The Company concluded, “Glass Lewis undermines the integrity of its own
recommendation, arguing that the Elliott nominees have already
compromised their independence by agreeing to an unusual contingent
bonus scheme that incentivizes them to pursue Elliott’s short-term
goals. Leading corporate governance experts have called this kind of
scheme ‘the dark side’ of activism. It is troubling that
All shareholders of record as of
About Hess’ New, World-Class Independent Directors:
John Krenicki Jr.Former Vice Chairman of GE; President and Chief Executive Officer of GE Energy
Mr. Krenicki’s experience leading large scale initiatives and operations across a global energy portfolio will add important perspective to the Hess Board as the Company completes its transformation to a pure play E&P company.
Kevin MeyersFormer Senior Vice President of E&P for the Americas, ConocoPhillips
Dr. Meyers was at the forefront of the oil & gas industry’s focus on developing U.S. shale formations. He led ConocoPhillips’ expansion in emerging shale plays, including the Eagle Ford,
Permian Basin, and Bakken shale plays. Dr. Meyers will bring to the Hess Board decades of managing cost-efficient E&P operations in shale and conventional properties directly relevant to Hess’ focused E&P portfolio.
Fredric ReynoldsFormer Executive Vice President and Chief Financial Officer, CBS Corporation
Mr. Reynolds will bring to the Hess Board his substantial experience as a CFO with a successful track record of financial oversight, leading a successful transformation, returning capital, and delivering long term returns.
William SchraderFormer Chief Operating Officer, TNK-BP Russia
Mr. Schrader is an outstanding E&P executive responsible for transforming BP’s best and most valued E&P assets, and will bring to the Board his experience as a disciplined E&P operator with expertise in production sharing structures, government relations, and delivering returns.
Mark WilliamsFormer Executive Committee Member, Royal Dutch Shell
Dr. Williams worked for over 30 years at Shell, including more than 17 years of U.S. E&P experience, serving most recently as a member of the Executive Committee of
Royal Dutch Shell, where he was one of the top three operating executives collectively responsible for all strategic, capital, and operational matters. He is widely acknowledged to be one of the world’s top oil & gas executives, and will add invaluable insight to Hess’ Board.
This document contains projections and other forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These projections
and statements reflect the Company’s current views with respect to
future events and financial performance. No assurances can be given,
however, that these events will occur or that these projections will be
achieved, and actual results could differ materially from those
projected as a result of certain risk factors. A discussion of these
risk factors is included in the Company’s periodic reports filed with
This document contains quotes and excerpts from certain previously published material. Consent of the author and publication has not been obtained to use the material as proxy soliciting material.
Important Additional Information
For Hess Corporation
Jay Wilson, 212-536-8940
MacKenzie Partners, Inc.
Dan Burch/Bob Marese, 212-929-5500
Jon Pepper, 212-536-8550
Sard Verbinnen & Co
Michael Henson/Patrick Scanlan, 212-687-8080