Oil and gas company Hess Corp. (HES) said Friday that it will separate the roles of chairman and chief executive officer immediately following its annual meeting of shareholders to be held on May 16.
Hess' chairman and CEO John Hess has offered his full-support for the decision, which comes even as the company is involved in a proxy battle with activist hedge fund Elliot Management Corp.
John Krenicki, former vice chairman of diversified conglomerate General Electric Co. (GE), has agreed to serve as the company's non-executive chairman, if he is elected together with the other Hess nominees, the company said in a statement.
Krenicki joined private equity firm Clayton, Dubilier & Rice in 2013 after 29 years in senior leadership roles at GE.
Under Krenicki's leadership since 2005, GE Energy more than doubled in size and profitability to become GE's largest business, with revenue increasing to over $50 billion in 2012 from $22 billion in 2005 and represented roughly one third of GE's total profits. His responsibilities included oversight of GE's Oil & Gas, Power & Water, and Energy management businesses.
Krenicki said, "I speak for all of Hess' nominees in stating unequivocally our commitment to vigorously oversee the execution of the Hess plan on behalf of all shareholders, as well as the careful consideration, study and pursuit of all strategies to ensure continued value creation at Hess."
John Mullin, Hess' Lead Director, said, "We understand our shareholders' views, and recognize that our corporate governance structure should have been improved sooner. Separating the roles of Chairman and CEO and declassifying our Board reflects our commitment to shareholders."
New York-based Hess' actions are meant to thwart efforts by Elliott Management to get its own slate of five director nominees to be elected to the company's board.
Proxy advisory firms like Institutional Shareholder Services and Glass Lewis have also recommended shareholders to vote for the hedge fund's nominees.
Elliott, which beneficially own more than 4 percent of Hess shares, has said it strongly advocates for Hess to conduct a strategic and operational review to consider pathways to maximize shareholder value.
This includes implementing a substantial divestment program with a potential spinoff of the Bakken asset to refocus the Hess portfolio, improving operations and accountability, and bringing greater discipline to capital allocation.
In March this year, Hess said it planned to full exit its downstream business and become a pure play exploration and production company.
Meanwhile, Hess recommended that its shareholders vote for election of the company's slate of five independent director nominees at the annual meeting.
Hess' slate of director nominees are Dr. Kevin Meyers, former senior vice president of E&P for the Americas, ConocoPhillips (COP); Fredric Reynolds, Former EVP and CFO of CBS Corp (CBS); William Schrader, former COO of TNK-BP Russia (TNKBF); Dr. Mark Williams, former executive committee member of Royal Dutch Shell plc (RDS-A, RDS-B) and James Quigley, former CEO of Deloitte.
In Friday's regular session, HES is trading at $69.64, down $1.32 or 1.86 percent on a volume of 230,405 shares.
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