Hess director nominees issue letter to counter attacks by rivals
US oil company Hess Corp, embroiled in a proxy fight with hedge fund Elliott Management, has accused proxy advisory firm ISS of adopting a ‘pervasive policy of bias’ toward activist investors that prompts shareholders to damage the company’s prospects at the May 16 annual meeting.
The comments by Hess, made in a letter to investors posted on its website, come after ISS recommended that shareholders vote in favor of five candidates proposed by Elliot to replace five current directors on the Hess board. Elliot has proposed the board overhaul to counter what it calls ‘unrelenting underperformance’ of the company’s stock. Hess has also proposed five new board candidates to replace five sitting directors.
‘Hess believes the ISS report on the proxy contest with Elliott is a fundamentally flawed analysis that does not address key issues,’ the company says in its letter, citing a New York Times survey showing that ISS has backed insurgent slates in 73 percent of its recommendations so far in 2013. ‘ISS’ near-dogmatic presumption that dissident directors are, by definition, beneficial if added to a corporate board is undercutting its credibility.’
Hess also cites a series of recent proxy battles in which advisory firms have taken the side of activist shareholders, including fights between AOL and Starboard Value, Motorola and Carl Icahn, Agrium and Jana Partners, and Barnes & Noble and Yucaipa, among others.
The five directors proposed by Hess have issued a letter countering claims by Elliot that they are beholden to the company. In it, they also attack the recommendations by ISS and Glass Lewis, another proxy advisory firm that recommended a vote for the five Elliot board candidates.
‘Contrary to suggestions by Elliott in the heat and noise of the proxy fight, none of us were required to support the Hess strategic plan as a precondition for serving on the Hess board,’ reads the letter issued to shareholders by Hess’ board candidates. ‘The Elliott characterization is simply false. And ISS and Glass Lewis are completely wrong to imply anything to the contrary.
‘As the proxy fight has worn on, we find it interesting that the Elliott nominees, who stand to be paid millions of dollars more than we do if elected, have either professed not to have studied the Hess plan (a plan enthusiastically endorsed by the market), or they now endorse the broad outlines of the Hess plan.’
The Hess candidates include John Krenicki, former vice chairman of General Electric; Kevin Meyers, a former senior executive at ConocoPhillips; and Mark Williams, who served on the Royal Dutch Shell executive committee.
Elliot’s candidates include former American Express CEO Harvey Golub, former BP deputy chief executive Rodney Chase, former Anadarko Petroleum COO Karl Kurz, and Marshall Smith, CFO of Ultra Petroleum.
