Hess Says Singer Paying Board to Liquidate Oil Company
“Under this highly unusual scheme, Elliott would control its directors by potentially paying them millions in cash to effectively dismantle Hess,” Chairman and Chief Executive Officer John Hess said in a letter to shareholders today. Hess is fighting Elliott’s proposal to replace five of the company’s 13 board members at a meeting scheduled for May 16.
Elliott, the second-largest Hess shareholder, has said the company should sell assets and bring in new board members after years of “unrelenting underperformance.” Hess has rejected Elliott’s nominees, proposed its own slate of six new board members and announcing plans to exit certain businesses as it transforms into an exploration and production company.
Under an agreement with its slate, Elliott will make a one- time $50,000 cash payment to each candidate nominated to the Hess board, according to a March 20 filing with the U.S. Securities and Exchange Commission. The New York-based hedge fund would make additional payments if Hess outperforms peers for three years, according to the document.
Elliot Sloane, a spokesman for the fund, had no immediate comment on the Hess letter. Elliott on March 6 denied plans to liquidate the company and accused Hess of “scare tactics.”
Elliott would pay the nominees bonuses of $10,000 for each 1 percent that Hess shares exceed the average total return of peers in the first three years, if any of the candidates makes it onto the board. Members who are appointed or elected to the board will be eligible for another $20,000 for each 1 percent of outperformance.
Hess released its letter to shareholders before regular trading began on U.S. markets. The shares rose 0.2 percent to $70.44 yesterday in New York. They have gained 33 percent this year.
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