NEW YORK May 13 An activist hedge fund's
nominees to the Hess Corp board of directors said they
were waiving their right to receive a controversial pay package
under which the fund will pay them extra if the oil and gas
company outperforms its peers under their watch.
The pay package had become a point of contention in the
heated proxy battle between the oil and gas company and hedge
fund Elliott Management, which nominated the slate of directors.
Hess said the pay -- which would not be available to the
company's other directors -- compromised the nominees'
Hess shareholders are set to vote on the board nominees on
Hess and Elliott Management, have been lobbying investors to
back their nominees. Hess said last week that it would separate
the posts of chairman and chief executive, stripping longtime
CEO John Hess of his chairmanship.
If elected, the Elliott nominees would have been eligible to
receive $30,000 from the hedge fund for every percentage point
that Hess outperformed its peers over their first term as
"As we have said all along, Elliott`s directors compromised
their independence and judgment by agreeing to accept Elliott`s
compensation scheme," Hess lead director John Mullin said in a
"The admission today by Elliott and its nominees makes it
clear that shareholders agree that Elliott`s scheme was
unacceptable," he said.
Elliott Management, which owns a 4.5 percent stake in Hess,
has been clamoring for change at the company since January, when
it launched its campaign to seat the new directors and pitched a
plan to break up the company. The hedge fund has railed against
the current board, alleging that directors are too closely tied
to Hess Chief Executive John Hess and that poor oversight has
led to underperformance.
As Hess has mounted its defense against Elliott's arguments,
the company has announced plans to exit its retail gasoline,
marketing and trading businesses and assembled its own slate of
new independent directors for its board.
In a letter to shareholders, the five Elliott nominees
called the attention paid to their pay arrangements a
"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," they said in
Hess shares rose 11 cents to $69.41 on the New York Stock
Exchange in midday trading on Monday.