Elliott Management Releases Letter to Hess Shareholders

  Elliott Management Releases Letter to Hess Shareholders

Business Wire

NEW YORK -- March 26, 2013

Elliott Management Corporation (“Elliott”) today sent a letter to the
shareholders of Hess Corporation. Full text of the letter follows:

“Dear Fellow Shareholder:

We are writing to you because Hess Management has made repeated untrue
statements to Shareholders regarding Shareholder Nominees. After 460%
underperformance, John Hess has no record to run on and has resorted to
misrepresentations and scare tactics. We want to set the record straight so
that Shareholders can make a determination based on facts.

         Why Is Hess Making False Statements to Its Own Shareholders?

#1: Hess FALSE Statement: Hess Management says Shareholder Nominees are paid
to “liquidate the Company” or carry out “an Elliott plan.”

REALITY: Shareholder Nominees, if elected to the Board, receive $30,000 for
each 1% that Hess’s stock outperforms Hess’s own proxy peers as measured at
the end of the Shareholder Nominee’s three-year term as a director (2016). The
agreement is filed along with Elliott’s preliminary proxy materials. The
obligation to pay is contractually fixed and not subject to Elliott’s
discretion.

In other words, each Shareholder Nominee receives compensation three years
from now and only to the extent that Hess’s stock outperforms its peer group.
For example, if Hess’s stock—which you and we own—outperforms its peers by 10%
over the next three years, a Shareholder Nominee who served a full term would
receive $300,000 (10 x $30,000). Money well-earned, we believe, and earned in
a manner clearly aligned with long-term Shareholders’ interests.

Shareholder Nominees are completely independent, would constitute a minority
of directors, and, unlike Hess’s nominees, have not preapproved any plan. If
elected to the Board, each of these executives will bring substantial
expertise, experience, and independence that we believe is sorely needed at
Hess.

In sharp contrast, Hess has been a Golden Meal Ticket awarding $540 million to
Management and Directors under the current CEO’s tenure despite
underperforming peers by (460)%. Furthermore, according to public records,
John Hess through his family estate has paid millions of dollars directly to
board members for service to the estate.

#2: Hess FALSE Statement: We have been told that Hess Management in several
private meetings with fellow Shareholders stated that Shareholder Nominees
would be paid $9 million to sell the Company.

REALITY: This is simply not true. The $9 million figure represents the
contractual cap (i.e., the maximum payment) in the compensation agreement. In
order to achieve a $9 million payment, Hess would need to outperform peers by
300%! 300% outperformance implies a stock price of ~ $250 per share or market
capitalization increasing by ~ $60 billion. Here is what that would look like:

http://goo.gl/c80AI

We believe that all Shareholders should find any such mischaracterizations
offensive. Hess has a detailed description of the agreement and competent
attorneys paid for with Shareholder money. Any such attempt to mislead these
same Shareholders would be outrageous and inconsistent with Management’s
obligations as a fiduciary.

#3: Hess FALSE Statement: Hess Management characterizes Shareholder Nominee
compensation as short-term focused.

REALITY: Shareholder Nominee compensation is more long-term oriented than any
plan currently at the Company. At Hess, Directors are paid in fully vested
stock they can sell immediately and Management receives performance share
units and options that vest over three years. Furthermore, existing
compensation arrangements with Management include a collective $80+ million
change of control payment.

                       What Could Be Hess’s Motivation?

Rather than attack the Shareholder Nominee compensation plan, Hess should
adopt it. Hess’s current compensation arrangements have failed to link payment
to performance, prompting Glass Lewis to write:

  In our view, shareholders should be deeply concerned with the compensation
                committee’s sustained failure in this area.^1

In 2012, in response to repeated criticism for poor payment practice, Hess put
in place performance share units. These units pay out over three years based
on Hess performance versus peers—same term and concept as Shareholder Nominee
compensation. However, Hess performance units award recipients 50% to 100% of
their target bonuses even if Hess is in the bottom 3^rd quartile. ISS has
commented:

Shareholder returns continue to underperform peers… while CEO pay compensation
outranked most peers…. [G]oals for performance shares… do not appear rigorous
                relative to historical award opportunities.^2

Under the current CEO’s tenure Hess has been a Golden Meal Ticket for the
Board and Management:

FACT #1: Total Compensation Paid to Current Directors: $31.8 million

FACT #2: Total Compensation Paid to John Hess: $194.9 million

FACT #3: John Hess in Forbes Top 25 Highest-Paid CEOs in 3 of last 5 years

FACT #4: Total Compensation Paid to Management (excluding the CEO): $313.2
million

FACT #5: Total Compensation Paid to Management and Directors: $539.9 million^3

FACT #6: John Hess’s family estate has paid $7.9 million directly to current
and past board members, including $2.9 million paid to Lead Independent
Directors

These numbers are STAGGERING… They are even more shocking in light of Hess’s
unrelenting underperformance that has gone unchecked due to a Board lacking
independence:

                      John Hess Tenure
                                                                 
                     17 Years   5-Year    4-Year    3-Year    2-Year   1-Year
                                                                  
vs Proxy Peers        (333  )%   (31  )%   (43  )%   (29  )%   (40 )%   (17 )%
                                                                  
vs Revised Proxy      (460  )%   (45  )%   (63  )%   (44  )%   (47 )%   (20 )%
Peers
                                                                  
vs Bakken Operators   NA         (263 )%   (984 )%   (184 )%   (70 )%   (16 )%
                                                                  
vs XLE                NA         (31  )%   (57  )%   (43  )%   (44 )%   (20 )%
                                                                  
vs XOP                NA         (39  )%   (81  )%   (52  )%   (39 )%   (15 )%

                       Hess Has an Indefensible Record

                            It Is Time for Change

       We Ask for Your Support for the Independent Shareholder Nominees

Sincerely,

Elliott Associates & Elliott International”

Please visit www.ReassessHess.com for more information.

Additional Information

Elliott Associates, L.P. and Elliott International, L.P. (“Elliott”) intend to
make a filing with the Securities and Exchange Commission of a definitive
proxy statement and an accompanying proxy card to be used to solicit proxies
in connection with the 2013 Annual Meeting of Stockholders (including any
adjournments or postponements thereof or any special meeting that may be
called in lieu thereof) (the “2013 Annual Meeting”) of Hess Corporation (the
“Company”). Information relating to the participants in such proxy
solicitation is available in a preliminary proxy statement filed by Elliott
with the Securities and Exchange Commission on March 20, 2013 and in any
amendments to that preliminary proxy statement. Stockholders are advised to
read the definitive proxy statement and other documents related to the
solicitation of stockholders of the Company for use at the 2013 Annual Meeting
when they become available because they will contain important information,
including additional information relating to the participants in such proxy
solicitation. When completed and available, Elliott’s definitive proxy
statement and a form of proxy will be mailed to stockholders of the Company.
These materials and other materials filed by Elliott in connection with the
solicitation of proxies will be available at no charge at the Securities and
Exchange Commission’s website at www.sec.gov. The definitive proxy statement
(when available) and other relevant documents filed by Elliott with the
Securities and Exchange Commission will also be available, without charge, by
directing a request to Elliott’s proxy solicitor, Okapi Partners, at its
toll-free number (877) 796-5274 or via email at info@okapipartners.com.

Cautionary Statement Regarding Forward-Looking Statements

The information herein contains “forward-looking statements.” Specific
forward-looking statements can be identified by the fact that they do not
relate strictly to historical or current facts and include, without
limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,”
“plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could” or
the negative of such terms or other variations on such terms or comparable
terminology. Similarly, statements that describe our objectives, plans or
goals are forward-looking. Our forward-looking statements are based on our
current intent, belief, expectations, estimates and projections regarding the
Company and projections regarding the industry in which it operates. These
statements are not guarantees of future performance and involve risks,
uncertainties, assumptions and other factors that are difficult to predict and
that could cause actual results to differ materially. Accordingly, you should
not rely upon forward-looking statements as a prediction of actual results and
actual results may vary materially from what is expressed in or indicated by
the forward-looking statements.

About Elliott Associates

Elliott Associates, L.P. and its sister fund, Elliott International, L.P. have
more than $21 billion of capital under management. Founded in 1977, Elliott is
one of the oldest hedge funds under continuous management. The Elliott funds'
investors include large institutions, high-net-worth individuals and families,
and employees of the firm.

^1 Glass Lewis 2012 Hess Corporation Proxy Paper

^2 ISS Proxy Advisory Services, 2012 Hess Corporation Core Report

^3 Given ~20-year tenure of many directors and 17-year tenure of CEO,
compensation is adjusted for inflation using Bloomberg Urban CPI.
Non-inflation-adjusted, total compensation was $463.4 million and total
compensation from John Hess estate was $6.5 million

Contact:

Media Contact:
Sloane & Company
John Hartz, 212-446-1872
718-926-3503 (cell)
or
Investor Contact:
Okapi Partners LLC
Bruce H. Goldfarb/ Pat McHugh/ Geoff Sorbello
212-297-0720
info@okapipartners.com
 
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