Hess Corp. (HES) again urged shareholders to support its slate of board candidates as the exploration-and-production company continued its criticism of dissident investor Elliot Management Corp.'s efforts to elect five board members and directly pay them bonuses based on how Hess shares perform.
In a letter to shareholders Tuesday, Chairman and Chief Executive John Hess outlined support for Hess's multiyear plan to transform into a pure-play exploration and production company as well as the company's board nominees. The letter provided a list of quotes from Wall Street analysts in recent weeks and also touted the company nominees' qualifications in the key areas such as restructurings and alternative shale drilling.
In the letter to shareholders, Mr. Hess stated, "We find the prospect of Paul Singer, a shareholder, potentially paying directors millions of dollars in contingency fees for pre-determined outcomes to be highly troublesome from a governance perspective, and have concerns about the Singer directors' ability to act as fiduciaries on behalf of all Hess shareholders."
Elliott, a hedge-fund manager that controls 4.4% of Hess' shares, wants to split Hess into two companies in a bid to boost the stock, which has lost 47% of its value since peaking in 2008.
Hess reiterated that Elliott's plan to pay bonuses to its board nominees--in addition to the regular compensation they would receive as directors from Hess-- means they wouldn't be truly independent from the hedge-fund manager, a claim Elliott has disputed.
The outcome of the contest is being closely watched in the energy industry amid a rise in shareholder activism that has forced changes in recent months at natural-gas producers Chesapeake Energy Corp. (CHK) and SandRidge Energy Inc. (SD). The meeting is set for May 16.
Hess shares closed Monday at $70.44 and were inactive in recent premarket trading.
Copyright (c) 2012 Dow Jones & Company, Inc.
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