Relational Investors Backs Elliott Management Slate Over Hess
Letter disavows company of idea that investor backs its board nominees vs. hedge fund's
NEW YORK -- Activist investment firm Relational Investors LLC plans to support a slate of directors nominated to Hess Corp.'s board by hedge fund Elliott Management, saying those nominees would assure greater accountability at the oil and gas company, according to a Reuters report.
Elliott Management has been calling for change at Hess since January, when it launched a campaign to seat five new directors on the board and pitched a plan to reevaluate the company's strategy and possibly break up the company. Hess has since announced plans to exit its retail gasoline, marketing and trading businesses, and assembled its own slate of six new directors for its board.
Relational Investors sent Hess CEO John Hess a letter on Wednesday to make its position clear. The investment firm, which owns around 3% of Hess' outstanding shares, noted that the executive may have indicated in meetings with shareholders that Relational Investors planned to support the Hess nominees.
Relational Investors also urged Hess to negotiate with Elliott Management, said the report.
"Our preference would be a board consisting of you, the company's six new nominees plus Elliott's five nominees," Relational Investors' David Batchelder wrote to the executive. "This would be a board of which we could all be proud."
Relational Investors owns about 2.7% of Hess shares, added a report by The Wall Street Journal. The letter came after it heard there was some potential confusion on its position.
Elliott Management wants Hess to split into two companies: one focused on extracting oil and natural gas from U.S. shale formations and another involved in international exploration. It has proposed a slate of new directors that includes former Anadarko Petroleum Corp. executive Karl Kurz, former BP America CEO Rodney Chase and former American Express CEO Harvey Golub.
Hess, which has said it will sell billions of dollars worth of assets and focus on exploration and production, has rejected the call to split in two. The company has proposed its own slate of six new directors, including former CBS Corp. Chief Financial Officer Frederic Reynolds, former Deloitte CEO James Quigley and John Krenicki Jr., the former head of General Electric Co.'s energy unit.
Shareholders will choose new directors at Hess's annual meeting on May 16.
Batchelder wrote that it was his understanding that Hess may have indicated to other shareholders that Relational Investors was on board with the Hess slate. The San Diego firm is not, he wrote.
"While the company's new nominees are an improvement over the incumbent directors, Elliott's nominees assure greater accountability and as more likely to continue to explore all avenues to enhance shareholder value while providing more pertinent [exploration and production] experience," he wrote.
Only a portion of Hess's 14-member board stands for election each year, but Relational Investors said it wouldn't mind if there was greater change on the board, the Journal said.