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NEW YORK -- The battle between Hess Corp. and Elliott Management Corp. took another turn today when the activist investor group released a letter to Hess shareholders addressing what it believes is their biggest concern: board of director compensation.
The letter was sent on behalf of Elliott Management's five board of director candidates: Rodney Chase, Harvey Golub, Karl Kurz, David McManus and Marshall Smith. The goal of electing Elliott's candidates to Hess' board of directors is to kickstart what the investor group -- which owns 4.52 percent of Hess' shares -- calls an "underperforming stock."
If elected, the five Elliott Management nominees were set to receive financial compensation based on Hess' stock appreciating. Many Hess shareholders expressed concern about the compensation plan during the "Reassess Hess" Town Hall Meeting the activist investor group hosted at the Le Parker Meridien hotel in New York City on April 30, and worried that drastic moves might be taken to boost the oil company's near-term stock price, which could subsequently hurt the company in the long-term.
Elliott Management's letter today to Hess shareholders effectively changes the compensation plan. "We have noted the ongoing distraction around our compensation arrangements with Elliott Management," the nominees stated in their letter. "As such, while each of us believes that these arrangements are appropriate and consistent with the performance of our duties as independent directors, each of us has made the decision to waive our right to receive these payments from Elliott."
Hess has nominated its own candidates to the board of directors and since March, has repeatedly stated its intention to become a pure-play exploration and production company -- a move it believes will help the company prosper moving forward. As part of that plan, Hess will sell off its retail division, consisting of 1,361 convenience stores and gas stations as of Dec. 31.
The proxy battle will end on Thursday, May 16, when shareholders will vote on Hess' board of director nominees at its annual meeting.