Hess Corp. (HES) will add two directors from dissident shareholder Elliott Management Corp.’s board nominees if the company’s five candidates are elected on May 16, calling it a “resolution to end” a divisive proxy contest.
The company made the proposal after Elliott’s five nominees announced earlier today they would forgo bonuses promised by the hedge fund based on Hess’s share performance, the New York-based oil company said in a statement.
Hess didn’t say whether Elliott’s candidates would replace or supplant incumbent directors not up for election this week. The company said May 10 that it would strip Chief Executive Officer John Hess of his chairmanship regardless of the outcome of the May 16 vote. Elliott, the hedge fund controlled by billionaire Paul Singer, has accused John Hess of poor management and demanded divestitures.
“We wanted resolution and this isn’t it,” David Batchelder, principal and co-founder of Relational Investors LLC, holder of a 2.7 percent stake in Hess, said today in a telephone interview. “We want 10 new board members: The five from Elliott and the five from Hess replacing incumbent directors.” Batchelder in January called for Hess to compromise with Elliott and avoid a costly proxy battle.
Elliott, Hess’s second-largest shareholder, said the proposal is a “PR stunt” and called for “constructive dialog” on “substantial change in the boardroom.”
Hess, which sought shareholder support for its own board-member changes, has announced asset sales this year that will yield $3.4 billion as it exits refining, gasoline retail and other businesses to become a pure oil exploration and production company.
“Consistent with our commitment to refresh the majority of our board by the end of 2013, we are prepared to add two Elliott nominees whom we would choose in consultation with shareholders,” Hess said in today’s statement.
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