Hess to Split Chairman, CEO in Bid to Counter Activist
Hess plans to split the roles of chief executive and chairman and appoint a former General Electric executive to head its board, countering efforts by an activist investor to shake up management at the oil and gas producer.
John Krenicki, a former vice-chairman of GE, will be appointed non-executive chairman immediately after an annual meeting next Thursday, if elected together with the company's other nominees, Hess said in a statement.
Hess said that its current chairman and chief executive, John Hess, supported the decision. The company did not explicitly say that Hess would continue as CEO, but it did not nominate any other candidates for the position.
Hess had already exited its refining business, joining rivals in seeking value from the separation of production and refining, when it announced in March that it would offload its energy trading arm by 2015.
Analysts said pressure from investors had accelerated the company's long-term plan to focus on exploration and production.
Following criticism that its board lacked independence, Hess has assembled its own slate of six directors, including Krenicki -- a 29-year General Electric veteran and one of just four GE vice-chairmen when he left the company last year.
But hedge fund Elliott Management, which owns a 4.5 percent stake in Hess and has been clamoring for change, has launched its own campaign to have five new directors appointed.
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.
"Regardless of whether Elliott wins the bid for their proposed board seats, Hess has become more Street-friendly in the midst of the proxy fight," analysts at investment bank Tudor, Pickering, Holt & Co said.
Also on Friday, 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 also said it was splitting the roles of chairman and chief executive after consulting its shareholders.
Another U.S. oil company, Occidental Petroleum, bowed to shareholder pressure last month and changed its policies to prevent former CEOs from serving on the board.
Hess's shares have gained 13.6 percent since the company's disclosure on Jan. 29 that Elliott was trying to break up the company. Its shares closed at $70.96 on Thursday on the New York Stock Exchange.