Hess Sends Second Letter to Shareholders Asking for Support
NEW YORK -- Hess Corp continues to wage a battle against activist hedge fund manager Elliott Management Corp., owner of more than 4 percent of its stock.
The oil company today issued a second letter to its shareholders encouraging them to vote for the election of its six "highly qualified" independent board of director nominees.
Elliott Management, run by CEO Paul Singer, has repeatedly stated Hess' stock is undervalued and has proposed a different set of five people be elected to the oil company's board. However, Hess' letter to shareholders today alleges Elliott Management has not even made an "effort to meet with us to learn about Hess."
In addition, the oil company's letter, signed by Chairman and CEO John Hess, states Elliott's proposed new board of directors are "being compensated directly by Elliott through an unusual contingent payment scheme that incentivizes them to support a short-term breakup plan that will effectively liquidate Hess."
Instead, Hess is asking shareholders to support its plan, which calls for it to become a pure-play exploration and production company. As part of Hess' plan, it would spin off or sell its entire convenience store and gas station business, comprising 1,361 locations as of Dec. 31.
As CSNews Online reported last week, Hess sent a similar letter to shareholders encouraging them to vote on its transformation plan on or before its annual meeting, scheduled to take place on May 16.
But unlike last week, Elliott issued a response to Hess' claims today. In its letter, Elliott alleges Hess' stock has underperformed competitor companies by 460 percent under John Hess' tenure as CEO; has been in "a state of perpetual ineffective restructuring for 17 years"; has paid management and the board of directors $540 million under the CEO's tenure; and lifted John Hess to a spot on the Forbes highest-paid CEO list three of the last five years.
"We believe the record clearly demonstrates the history of a CEO focused more on maintaining a family dynasty then instilling accountability and addressing chronic underperformance," Elliott Management stated in its letter.
John Hess owns 10 percent of the oil company's stock.