Hess Comments on ISS Report

  Hess Comments on ISS Report

ISS Betrays Own Principles; Flawed Analysis Ignores Key Facts and Hess’ Slate
                of All New, World-Class Independent Directors

Egan Jones Recommends Hess Shareholders Support All of Hess’ New, Independent
                              Director Nominees

 Hess Urges Shareholders to Protect Value of Investment, Vote for Its Highly
                 Qualified Directors on the White Proxy Card

Business Wire

NEW YORK -- May 3, 2013

Hess Corporation (NYSE: HES) today commented on the report issued by
Institutional Shareholder Services Inc. (“ISS”). ISS's flawed analysis does
not reflect the fact that Hess has nominated five all new independent director
nominees to oversee the continued execution of a market-endorsed
transformation plan and disregards the highly problematic compensation scheme
put in place for Elliott Management’s dissident nominees. Hess notes that Egan
Jones, a competing proxy advisory firm, yesterday issued a report in support
of ALL of Hess’ director nominees and believes that shareholders who conduct
their own thoughtful analysis will arrive at the same conclusion. Hess
continues to urge shareholders to vote on the WHITE proxy card FOR all of its
new, highly qualified, independent director nominees at the Company's 2013
Annual Shareholders Meeting, which will be held on May 16, 2013.

The Company said, “ISS has betrayed its own principles. We have exceeded ISS’s
burden of proof on all counts – the economic superiority of our transformation
plan and the suitability of a world-class slate of new, independent nominees
to oversee the execution of that plan. It is troubling that ISS would suggest
that shareholders support dissident candidates who are beholden to a new, four
percent shareholder that has offered no constructive ideas for change at Hess.
We are executing well against our multiyear transformation to a pure play E&P
company, a plan that has received overwhelming support from our shareholders
and independent Wall Street analysts. Our five new director nominees are
committed to creating sustainable long term value for all Hess shareholders
and are the clear choice for those who want truly independent, experienced new
directors who will represent their interests.

“The ISS report is in keeping with an institutional bias toward dissident
slates, recommending for the dissident on approximately 75 percent of proxy
contests. In this case, it is especially troubling that it has reflexively
supported dissident directors who are neither independent nor incentivized to
act in the best long-term interests of all Hess shareholders. Only in the
world of ISS could director nominees’ evaluation of a plan, which has been
endorsed by a majority of shareholders and independent research analysts, be
construed as a negative. It is disturbing precedent that ISS would deem it
unfit for a nominee to conduct due diligence on a company’s strategy and
business prior to joining the board. However, when a dissident slate tethers
itself to a flawed breakup plan by agreeing to a compensation scheme that
would guarantee their enrichment, while destroying long term value for all
Hess shareholders, ISS views that to be a positive. Astoundingly, this illogic
is a key predicate to their conclusion. At a time that we are delivering real
value, blindly following ISS’s recommendations introduces an irresponsible
level of risk for Hess shareholders. Electing Elliott’s nominees would
jeopardize the ongoing success of our transformation plan by creating a
strategically misaligned board which includes dissident nominees who are
directly compensated to pursue Elliott’s short-term agenda.

“ISS owes a duty to its clients – a duty that is based on cogent, clear-eyed
analysis of issues critical to the value of their clients’ investments. This
recommendation represents a breach of that duty:

  *it lacks any critical analysis of the dissident nominees;
  *disregards easily verifiable facts that would refute their analysis, such
    as our recent performance in the Bakken; and,
  *fails to articulate a basis to conclude that the non-incumbent and
    non-conflicted Hess slate is anything but superior to a conflicted,
    dissident slate that, in many of its own words, has already prejudged
    outcomes at Hess.

We urge institutional investors, who have fiduciary duties to their own
clients, to do their own analysis and come to their own conclusions,
particularly in light of ISS’s flawed and shoddy analysis.”

Hess notes that Egan Jones, an independent proxy advisory firm, has
recommended that Hess shareholders vote for ALL of the Company’s director
nominees on the WHITE proxy card:

Based on our review of publicly available information, we believe that voting
FOR the management’s nominees and voting FOR its other proposals is in the
best interest of the Company and its shareholders. In arriving at that
conclusion, we have considered the following factors:

1. The belief that the dissidents have not offered a persuasive,
comprehensive, strategic plan compared what the Company is executing that will
maximize shareholder value. We strongly believe that the management and the
Board has clearly demonstrated and executed its plans of transformation for
the Company. As stated in the Company’s public disclosure, Hess continues to
significantly cut capital expenditures and exploration spending, while driving
production growth and maintaining a focused exploration program. Moreover,
Hess has been implementing a successful asset divestiture program that has
enabled it to deliver higher growth, lower risk E&P assets.

2. We are not convinced that the dissidents’ nominees would work to the
benefit of the shareholders, given their level of industry expertise and
public company experience, and particularly if receiving compensation from
Elliott if elected. The latter would clearly demonstrate a potential conflict
of interest, affecting their independence and judgment, in our view.

3. The fact that the solicitation being made by the dissidents could disrupt
the ongoing efforts of the management toward the implementation of the
strategic plan.

The Company added, “Hess has nominated a slate of all new, independent
director nominees. These directors would be assets to any boardroom across
corporate America and are ideally suited to be directors at Hess. They have
impeccable credentials, are the right team to objectively oversee the
execution of Hess’ market-endorsed transformation plan, and are not beholden
to a single shareholder. We urge Hess shareholders to vote for all of our new,
independent, highly qualified director nominees who will continue our
transformation into a pure play E&P company that will drive increased returns
for all Hess shareholders.”

Hess also notes that ISS withheld judgment on the Elliott nominees’ unusual
contingent bonus scheme that incentivizes them to pursue Elliott’s short-term
goals. Leading independent corporate governance experts have raised serious
concerns about this compensation scheme, stating that it undermines the
independence of Elliott’s nominees and compromises their ability to act as
fiduciaries for all Hess shareholders. These experts have called for proxy
advisory firms such as ISS to develop more comprehensive policies regarding
such schemes, especially in light of the risks that it introduces to a target
company and its shareholders, including creating strategic misalignment on the

[Activists] are also enjoying a higher rate of success […] The reason is
probably the support that activists have received from the principal proxy
advisors: Institutional Shareholder Services (“ISS”) and Glass Lewis & Company
[…] Clearly, both [ISS and Glass Lewis] should develop and articulate their
policies regarding bonuses.

- John C. Coffee, Adolf A. Berle Professor of Law at Columbia University
School of Law
“Are shareholder bonuses incentives or bribes?” Reuters, April 25 2013

If this nonsense is not illegal, it ought to be.

- Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law,
UCLA School of Law, April 8, 2013

The Company concluded, “Each of the nominees put forward by Elliott has
already compromised his independence by agreeing to an unusual contingent
bonus scheme that incentivizes him to pursue Elliott’s short-term goals. In
its silence on the matter, ISS has essentially endorsed a scheme that leading
corporate governance experts have called ‘the dark side’ of activism. This
sets a disturbing precedent not just for Hess, but for all companies that now
risk being destabilized by the kind of short-termism driving hedge funds such
as Elliott. We would caution our shareholders against disrupting our progress
by voting for conflicted dissident directors whose decisions are motivated by
the direct and substantial compensation they would receive from a single

All shareholders of record as of April 8, 2013 are entitled to vote at the
2013 Annual Shareholders Meeting. Hess encourages all shareholders to
carefully review its definitive proxy filing and other materials and vote only
their WHITE proxy card. For more information about Hess’ 2013 Annual
Shareholders Meeting, please visit www.transforminghess.com.

Cautionary Statements

This document contains projections and other forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These projections and statements reflect
the Company’s current views with respect to future events and financial
performance. No assurances can be given, however, that these events will occur
or that these projections will be achieved, and actual results could differ
materially from those projected as a result of certain risk factors. A
discussion of these risk factors is included in the Company’s periodic reports
filed with the Securities and Exchange Commission.

This document contains quotes and excerpts from certain previously published
material. Consent of the author and publication has not been obtained to use
the material as proxy soliciting material.

Important Additional Information

Hess Corporation, its directors and certain of its executive officers may be
deemed to be participants in the solicitation of proxies from Hess
shareholders in connection with the matters to be considered at Hess’ 2013
Annual Meeting. Hess has filed a definitive proxy statement and form of WHITE
proxy card with the U.S. Securities and Exchange Commission in connection with
IMPORTANT INFORMATION. Information regarding the identity of potential
participants, and their direct or indirect interests, by security holdings or
otherwise, is set forth in the proxy statement and other materials filed with
the SEC. Shareholders will be able to obtain any proxy statement, any
amendments or supplements to the proxy statement and other documents filed by
Hess with the SEC for no charge at the SEC’s website at www.sec.gov. Copies
will also be available at no charge at Hess’ website at www.hess.com, by
writing to Hess Corporation at 1185 Avenue of the Americas, New York, NY
10036, by calling Hess’ proxy solicitor, MacKenzie Partners, toll-free at
(800) 322-2885 or by email at hess@mackenziepartners.com.


For Hess Corporation
Jay Wilson, 212-536-8940
MacKenzie Partners, Inc.
Dan Burch/Bob Marese
Jon Pepper, 212-536-8550
Michael Henson/Patrick Scanlan
Sard Verbinnen & Co
Press spacebar to pause and continue. Press esc to stop.