(Restores dropped “t” from Eliott name in first paragraph)
May 2 (Reuters) – Proxy advisory firm Glass Lewis told Hess
Corp’s shareholders late on Tuesday they should vote to
elect five new board members nominated by activist hedge fund
Elliott Management.
Hess has been under pressure from the hedge fund, which owns
a 4.5 percent stake in the oil and gas company, to implement
changes, including the election of independent directors to the
board, to increase shareholder value.
“We believe Elliott has submitted a compelling case to
suggest the Hess board has been largely ineffective at
overseeing current management,” Glass Lewis said in a note.
Hess raised its dividend and initiated a $4 billion share
buyback in March in an effort to boost shareholder returns, but
the advisory firm said that these only added to the problem.
“We find the board’s response to Elliott has been
flat-footed and reactive, as exemplified by…a vastly increased
dividend, a large share buyback program, unprecedented board
turnover and the hasty disposal of heretofore strategically
beneficial assets,” Glass Lewis said.
Hess responded to the recommendations by urging its
shareholders to elect its own nominees.
“Hess disagrees with Glass Lewis’ recommendation and
believes that shareholders who follow its recommendation at a
time when Hess is executing on a market-endorsed transformation
plan will put the value of their investment at risk,” the
company said in a statement.
Hess sold assets earlier this year in several of its
properties, including some in Texas and Russia, in an effort to
exit the refining and retail businesses and become a dedicated
exploration and production company.
New York-based Hess said it will nominate six new directors
at its annual meeting in May following criticism that its
current board lacked independence.
However, Glass Lewis called the move a “token proposal” to
keep shareholders happy while maintaining the status quo.
The advisory firm’s recommendation comes a few weeks after
Hess reported a surprise first-quarter profit in April.
Elliott Management officials could not be reached for
comment by Reuters outside regular business hours.
(Reporting by Tej Sapru in Bangalore; Editing by Matt Driskill)
