Krenicki elected chairman of board as chief executive gives up dual role
The months-old proxy fight between Hess Corp and Elliot Management ended hours before the annual shareholder meeting, as the US oil company agreed to name three directors proposed by the hedge fund, according to a joint statement.
Elliot, the second-largest shareholder in Hess with a stake of 4.5 percent, agreed to support Hess’s five candidates in return for the three seats, ending more than four months of criticism of the board, which it said lacked experience and was beholden to company management. In all, nine of the 14 board members were replaced.
‘We are pleased to reach an agreement that we believe is in the best interests of Hess shareholders, and we welcome each of our new directors,’ said John Hess, CEO of Hess Corp, in a statement to investors released jointly with Elliot. ‘We remain focused on execution and believe that the new board will provide effective oversight to ensure that we continue to create meaningful long-term value for all Hess shareholders.’
The board members proposed by Elliot include former American Express CEO Harvey Golub, former BP deputy chief executive Rodney Chase, and David McManus, the former head of international operations for Pioneer Natural Resources.
The board elected Mark Williams, a past member of Royal Dutch Shell’s executive committee, as chairman of the board. His election fulfills a promise by Hess to split the dual role of chairman and chief executive that was held by John Hess. Although Williams was nominated by Hess, he was not the company’s first choice as chairman. As the proxy fight continued last week, Hess announced that John Krenicki, a former General Electric executive, would serve as chairman.
‘We are pleased to welcome a highly-qualified and refreshed board at Hess,’ John Pike, senior portfolio manager at Elliott, said in the joint statement. ‘In just a few months, we have seen encouraging changes that will benefit all shareholders including the replacement of nine out of 14 board members and significant value creation for stockholders. As a substantial shareholder, we look forward to continued progress that will unlock further value.’
The appointment ended an increasingly bitter proxy fight in which Hess board members issued a statement defending their performance at the company and Hess management accused proxy advisory firm ISS of adopting a ‘pervasive policy of bias’ toward activist investors. ISS and Glass Lewis both came out in support of the Elliot-proposed board candidates.
