U.S. energy major,
) announced the imminent separation of the two key management
posts of chairman and chief executive officer, immediately
straight away after its Annual Meeting scheduled on May 16. As of
now, John Hess is serving as both the chairman and chief
executive officer of the company. The move comes from the
company's focused approach to avert hedge fund Elliott Management
Corporation's continued pressure about the future direction of
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Hess remains focused on continuing its transition from an
integrated oil and gas company to a predominantly exploration and
production (E&P) entity. To keep the rein of the company in
its own hands, the company has put forward the candidature of a
former vice chairman of
General Electric Company
) - John Krenicki - for the newly created post of non-executive
chairman. This tactical move is aimed at keeping John Hess as the
chief executive officer.
After acquiring a 4.5% stake in Hess, Elliott Management has
recently been seeking to elect five of its own directors to the
Hess board. The Elliot game plan is in sharp contrast to Hess's
objective of shifting its growth approach from a high-impact
exploration to lower-risk unconventionals and a smaller, more
focused exploration portfolio.
The company is of the opinion that Elliott Management is moving
ahead with its own plan of action without even making an effort
to learn about Hess. The company is of the viewpoint that the
Elliott directors are being compensated directly by the hedge
fund through an unusual contingent payment scheme that
incentivizes them to support a short-term break-up plan that will
effectively liquidate Hess.
Elliott Management is proactive in playing its role of an
activist investor. Recently the hedge fund, which oversees $21
billion in assets, was helping Stan Lee Media in its wrangle with
The Walt Disney Company
). The tussle was over the ownership rights of the Stan
Lee-created superheroes like Spider-Man, X-Men, The Incredible
Hulk and The Fantastic Four.
Hess is an integrated energy company engaged in oil and gas
E&P and refining as well as marketing. The company's E&P
activities are concentrated in Algeria, Australia, Azerbaijan,
Brazil, Denmark, Egypt, Equatorial Guinea, Gabon, Ghana,
Indonesia, Libya, Malaysia, Norway, Russia, Thailand, the United
Kingdom and the United States. As of year-end 2012, Hess' proved
reserves tally stood at 1.55 billion oil-equivalent barrels,
while the company replaced 141% of its production, resulting in a
reserve life of 10.3 years.
Hess carries a Zacks Rank #3, which is equivalent to a short-term
Hold rating. However, the Zacks Ranked #1 stock of
SM Energy Company
) is expected to outperform the market over the next few months.