Elliott Management Corp. has demanded that Hess Corp. CEO John Hess step down or consider a sale of the company, The Wall Street Journal reported Dec. 14.
Elliott, which owns a 6.7% stake in Hess, has fought with the company's leadership before, forcing John Hess to resign as chairman and pushing its own nominees onto the board in 2013. In that instance, Elliott was demanding the sale of assets, including the Hess brand gas stations. This time, the hedge fund is displeased with Hess's approach to shareholder returns, favoring a dividend cut in favor of stock buybacks, The Journal reported.
"As long-term shareholders in Hess, we are frustrated by the company's continuing underperformance," Elliott portfolio manager John Pike said in a statement to The Journal. "Shareholders are getting impatient because the changes needed to remedy Hess's severe undervaluation are substantial and need to be announced without delay."
'The Hess Board unanimously and unequivocally supports the company's current strategy and John Hess as CEO. While these are challenging times for the entire industry, Mr. Hess and the management team have moved aggressively and done an excellent job high-grading the portfolio and repositioning the Company — identifying one of the industry's largest and most exciting oil discoveries in the last decade in Guyana, working with our partner ExxonMobil to develop this world-class asset, divesting over $3.4 billion of mature, higher-cost assets in 2017, substantially lowering our cash unit costs — and returning billions of dollars in capital to shareholders. The Company is well positioned to deliver industry-leading returns and value to shareholders for many years to come," Hess said in a statement to S&P Global Market Intelligence.
Hess shares, which have dropped more than $20 over the past year, were down more than 3% to $42.67 in after-hours trading.