Hess Corp. (HES) said Monday it will add to its board two directors nominated by activist shareholder Elliott Management, as long as the oil company’s own slate of five nominees is elected.
The announcement, made just days before Hess’s annual meeting this week, is intended to bring a close to a proxy battle between the two sides.
Earlier Monday, five potential Hess directors nominated by Elliott said they waived their right to receive payments from the hedge fund, calling the compensation plan a “distraction.”
Hess has said Elliott’s nominees would not be independent since the firm was offering them compensation based on measures such as stock performance.
“While we have been encouraged by the enthusiastic public response to this campaign, we have also noted the ongoing distraction around our compensation arrangements with Elliott Management,” the nominees said 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 responded to the news by saying Elliott’s nominees gave up independence by agreeing to accept the compensation plan.
John Mullin, the board’s lead director, also said the move reflects that shareholders “have rejected the tortured logic from (proxy adviser) ISS,” which backed Elliott.
“This follows the Elliott nominees' recent move to back away from the flawed breakup plan for Hess that they had originally agreed to support—and they backed away only after hearing the overwhelming rejection of that plan by Wall Street research analysts and Hess shareholders,” Mullin said in a statement.
“The admission today by Elliott and its nominees makes it clear that shareholders agree that Elliott's scheme was unacceptable, and exposed Elliott's campaign for what it is, short termism at the expense of all shareholders.”
Last week, Hess unveiled plans to separate the roles of chairman and chief executive, both of which are currently held by John Hess.
Hess and Elliott have been locked in months-long proxy battle. The hedge fund, which owns a stake of about 4.5%, has criticized the company’s management and current slate of directors. Hess, which in March announced its plans to become a pure-play exploration and production company, has questioned the independence of Elliott’s nominees and accused ISS of having a bias toward activist shareholders.
ISS and Glass-Lewis, another proxy adviser, each backed Elliott’s board nominees.
Hess plans to hold its annual meeting Thursday in Houston.
Shares of Hess closed Monday up 9 cents at $69.39.