Hess Corp. (NYSE:HES) today announced that, after consulting with its shareholders, it will separate the role of Chairman and Chief Executive Officer after its Annual Meeting.
The oil company that is in a proxy battle with billionaire Paul Singer’s Elliot Management Corp., said it will strip Chief Executive Officer John B. Hess of the chairmanship after its May 16 Annual Meeting in Houston, TX.
Hess said that its current chairman and chief executive, John Hess, supported the decision. The oil and gas company did not explicitly say that Hess would continue as CEO, but it did not nominate any other candidates for the position.
Hess said it would start a “board renewal process” through which the majority of the board would comprise new directors by the end of 2013, in addition to the six new directors slated for election at the May 16 annual meeting.
Hess Corp. (HES) Plans
Hess Corp. (NYSE:HES) said on Friday that it planned to separate its chairman and chief executive roles, hoping to blunt a months-long campaign by an activist investor and assuage restive shareholders. Hess has indicated that following the annual meeting, the newly constituted Corporate Governance and Nominating Committee will outline responsibilities for the Non-Executive Chairman that are consistent with corporate governance best practices.
John Krenicki, former Vice Chairman of GE, has agreed to serve as Non-Executive Chairman, if he is elected together with the other Hess nominees.
John Mullin, Hess’ Lead Director remarked John Krenicki has had a distinguished career as one of the top executives at GE where he ran GE Energy while overseeing GE’s Oil & Gas, Power & Water, and Energy management businesses. Based on strong leadership qualities and unimpeachable independence, the Board believes that he, along with Hess’ other director nominees, has the right blend of experience and sound judgment to provide accountability, while guiding Hess’ transformation to a pure play E&P company for the benefit of all shareholders.
The second-largest shareholder Elliot has accused John Hess of poor management and proposed five new board members to increase accountability. The company, which is seeking shareholder support for its own board-member changes, has announced asset sales this year that will yield $3.4 billion as it exits refining, gasoline retail and other units to become a pure oil exploration and production business.
Two leading proxy advisory firms ISS and Glass Lewis have recommended that Hess shareholders elect the board members nominated by Elliott Management. Another advisory firm, Egan Jones, has backed Hess’s nominees.
Interestingly last month, bowing to shareholder pressure, another U.S. oil company, Occidental Petroleum Corporation (NYSE:OXY) changed its policies to prevent former CEO’s from serving on the board.