By Saabira Chaudhuri
Five of Hess Corp. (HES) director nominees released a letter to
shareholders defending their role at the company, while Hess
separately accused proxy advisory firm Institutional Shareholder
Services Inc. of having an "institutional bias toward activist
shareholders."
The communications on Monday are the latest in a months-long
proxy contest between the oil company and Elliott Management Corp.,
a hedge fund that owns about 4.52% of Hess's shares.
Elliott argues Hess' board sat by as the company has zigged and
zagged, allowing management to pursue costly and ineffective
strategies that have eroded the company's value. Hess says it is on
track to transforming itself into a more focused exploration and
production company, and Elliott is pursuing a destructive and
flawed plan to break up the company. New York-based Hess will hold
its annual meeting May 16 in Houston.
In a letter, Hess' nominees urged shareholders vote for the oil
company's nominees saying Elliott's characterization that Hess's
board members were required to support the Hess strategic plan as a
precondition for serving on the board "is simply false."
A representative of Elliott didn't immediately respond to an
emailed request for comment.
Hess's nominees also said Elliott's nominees, "who stand to be
paid millions of dollars more than we do if elected," barely
mention Elliott's initial plan for Hess, which they signed on to
and which has now been "discredited by the market."
Meanwhile, Hess said ISS has "adopted a pervasive policy of bias
in favor of the activist," citing a recent New York Times survey,
showing that the advisory firm has backed the insurgent slate in
73% of cases so far in 2013.
Among the examples cited by Hess were proxy contests between AOL
Inc. (AOL) and Starboard Value LP, Motorola Solutions Inc. (MSI)
and Carl Icahn and Target Corp. (TGT) and Pershing Square Capital
Management.
ISS last week cited the company's "significant
underperformance," and what it said are signs that the board's
"new-found attentiveness to the business is a response to the proxy
contest," adding Hess's transformation appears to have occurred
only on the surface and a slate of board members already aligned
with the company's management isn't in the best position to oversee
the company.
In response, Hess on Monday also said the ISS report fails to
address key issues, including the fact that Hess has enhanced its
governance "by nominating five new, world-class independent
director nominees to oversee and regularly review the continued
execution of a market-endorsed transformation plan, and the highly
problematic compensation scheme put in place for Elliott
Management's dissident nominees."
A representative of ISS also didn't immediately respond to a
request for comment.
Shares closed Friday at $73 and were inactive in recent
premarket trading. The stock has risen 43% in the past 12
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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