Hess Shareholders Pick New Board After Long Battle

Last-minute deal results in split officers, leadership that will now determine future of company

The frst Hess-branded gas station opens in Oakhurst,
N.J., in 1960.

HOUSTON -- Hess Corp. has announced voting results from its annual meeting of stockholders in Houston held earlier today, May 16.

As reported in a Raymond James/CSP Daily News Flash, earlier Thursday, as shareholders walked into the annual meeting, Hess and investor Elliott Management Corp. announced that they had reached an agreement to resolve their contentious proxy fight over selecting a new board of directors that will determine the changing strategy and direction of the company.

Pursuant to the agreement, Elliott Management withdrew all five of its nominees and agreed to support the election of the Hess slate. The board recognized three Elliott nominees: Rodney Chase, Harvey Golub, and David McManus.

At the meeting, stockholders elected the five company nominees: John Krenicki Jr., Fredric Reynolds, William Schrader, Kevin Meyers and Mark Williams.

"The Hess board of directors would like to welcome each of our new directors. Over the past several months, we have received constructive feedback from our shareholders, and our new board looks forward to continuing that dialogue. We remain focused on the execution of our transformation plan and are committed to working with all our Directors to create meaningful long-term value for all Hess shareholders," said John Hess, current chairman and CEO.

In accordance with the company's commitment to separate the positions of chairman and CEO, the board elected Mark Williams as nonexecutive chairman.

John Krenicki, who Hess had put forward to serve as chairman, said, "Williams is the perfect choice for nonexecutive chairman. I fully support the choice and look forward to working closely with him and the rest of the board."

And following the meeting, Elliott Management said, "Preliminary results indicate that [more than 60%] of shareholders, excluding [the] Hess family, voted for Elliott nominees; over 50% of all shareholders voted for Elliott's nominees."

As soon as the inspectors of election have completed the final tally of the exact results, Hess will report those results in a filing with the U.S. Securities & Exchange Commission (SEC), it said.

The reconstituted board would continue to consist of 14 persons as a result of retirements. The board will appoint two of the Elliott nominees to a five-member Nominating & Corporate Governance Committee, and one Elliott nominee to the Compensation Committee.

"We are pleased to reach an agreement that we believe is in the best interests of Hess shareholders, and we welcome each of our new directors," said John Hess. "We remain focused on execution and believe that the new board will provide effective oversight to ensure that we continue to create meaningful long-term value for all Hess shareholders."

Hess has adopted measures to refresh the majority of its board, separate the roles of chairman and CEO, and recommend in favor of a resolution to destagger the board with the full support of the Hess family shares.

"We are pleased to welcome a highly qualified and refreshed board at Hess," said John Pike, senior portfolio manager at Elliott Management. "In just a few months, we have seen encouraging changes that will benefit all shareholders including the replacement of nine out of 14 board members and significant value creation for stockholders. As a substantial shareholder, we look forward to continued progress that will unlock further value."

Elliott Management has been calling for change at Hess since January, when it pitched a plan to reevaluate the company's strategy and possibly break up the company. Hess since announced plans to exit its retail gasoline, marketing and trading businesses.

"The reassessment and transformation of Hess is underway," Elliott Management said. "We are extremely proud to have been the catalyst for welcomed changes. Much has been accomplished from our active engagement with the company, and we look forward to further constructive dialogue. After the public announcement of Elliott's intention to nominate directors, Hess has begun to change."

It listed the following accomplishments for which it that it takes credit:

  • Complete reconstitution of board with nine new independent directors to replace incumbents--the first time a non-management incumbent director has stepped down in a decade.
  • Chairman and CEO role to be split.
  • Board of directors to destagger.
  • Complete divestment of downstream assets.
  • Beginning steps undertaken to reposition upstream portfolio.
  • Commitment made to monetize Bakken midstream assets.
  • 150% increase in dividend – first increase in a decade.
  • Pledge to return $4 billion of capital to Shareholders through buybacks--the first in a decade.

Elliott Management's two funds, Elliott Associates LP and, Elliott International LP together have more than $21 billion of assets under management. It is one of the oldest hedge funds under continuous management.

Hess, based in New York, is a leading global independent energy company primarily engaged in the exploration and production of crude oil and natural gas and the marketing of refined petroleum products, natural gas and electricity. Hess is a major independent gasoline-convenience store retailers on the East Coast with more than 1,350 retail outlets in 16 East Coast states.