Hess Corporation HES
Hess's world-class assets are squandered by 17 years of John Hess's undisciplined, unaccountable leadership; electing Elliott's five nominees unlocks $96-128 per share of intrinsic value.
Thesis
Hess Corporation owns world-class assets — a premier Bakken position, long-life Southeast Asian oil reserves, valuable midstream infrastructure, and salable downstream — that Elliott values at $96-128 per share ($39-50bn) versus a stock languishing in the $60s. Under 17-year CEO John Hess, the company has underperformed proxy peers by 47% / $9.4bn of market cap foregone, cycled through seven restructurings, destroyed $4bn in exploration and $6.7bn in hedging, and switched benchmark peer groups repeatedly to obscure the gap. Elliott, a 4.52% owner with its largest-ever initial equity position, blames a culture of denial: a staggered board John Hess himself voted to preserve, zero analyst days for seven years, and a 2013 'transformation' Hess insists predates Elliott's campaign. The remedy is electing five independent nominees — Golub, Kurz, Smith, McManus, Chase — to impose focus, capital discipline, and accountability.
SCQA
Hess Corporation is a ~$20bn integrated oil & gas company whose assets — a premier Bakken position, long-life Southeast Asian oil reserves, Bakken midstream infrastructure, and salable downstream — Elliott sums to $96-128 per share.
Under 17-year CEO John Hess, Hess has underperformed proxy peers by 47%, destroyed $4bn in exploration and $6.7bn in hedging, cycled through seven restructurings, and entrenched a staggered board that insulates management from accountability.
Elect Elliott's five independent nominees — Harvey Golub, Karl Kurz, Mark Smith, David McManus, Rodney Chase — to impose focus, capital discipline, operational rigor, and genuine oversight that Hess's hand-picked directors cannot deliver.
Closing the discount to intrinsic asset value implies $96-128 per share versus sub-$70 trading — roughly 40-90% upside — with the Bakken position alone worth $13.0-14.4bn TEV.
The three reasons
- 1
Hess has underperformed every relevant peer over every time frame of John Hess's 17-year CEO tenure
- 2
Woefully flawed capital allocation: $4bn destroyed in exploration, $6.7bn lost in hedging (9% of E&P revenues)
- 3
Six failed restructurings and a culture of denial; only externally-imposed board change can fix entrenched problems
Primary demands
- Elect Elliott's five shareholder nominees (Golub, Kurz, Smith, McManus, Chase) to the Hess board at the 2013 AGM
- Reassess and focus the portfolio by divesting non-core international operations (spin off Hess International)
- Instill capital discipline: halt wasteful exploration, exit proprietary trading/HETCO, return more cash to shareholders
- Restore accountability: de-stagger the board, separate Chairman/CEO, reset governance culture
- Execute an effective, credible restructuring rather than the seventh failed 'transformation'
KPIs cited
Pattern membership
Precedents cited
- ConocoPhillips / Phillips 66 spin-off (integrated to pure-play E&P transition)
- Marathon Oil / Marathon Petroleum spin-off
- CN Rail transformation under Hunter Harrison (operational-excellence analogue via nominee track records)
Composition what's on the 161 slides
Slide gallery ·
Notes
161-page proxy-fight deck released ~mid-April 2013 (data cutoff 4/12/2013; exact day not printed on cover — 'April 2013' only). Companion URL www.ReassessHess.com. Notable rhetorical craftsmanship: (1) Elliott co-opts Hess's own green corporate branding and logo on every page — the deck visually reads as a Hess document arguing against Hess management. (2) Recurring six-pillar skeleton slide ('Unrelenting Underperformance / Lack of Focus / Undisciplined Capital Allocation / Operational Mismanagement / Endless Ineffective Restructurings / Abysmal Governance Culture') serves as navigation, with a red box highlighting the current chapter; then mirrored later as 'Deny Stock Performance / Deny Lack of Focus / ...' to frame the 'culture of denial'. (3) Heavy weaponization of CEO quote contradictions — e.g., 'You can't judge us on a one-year basis' paired with 'Since July 24, 2012 [six-month] Hess shares have increased'. (4) Explicit before/after via a red trendline (47% underperformance / $9.4bn foregone market cap under 17-year tenure) vs a tiny green recovery (5% outperformance since Elliott involvement). (5) Page 87 exposes original Hess slate's independence failures: two joint executors of Hess family estate, one officer of Hess. Campaign phase = proxy_fight: Elliott filed definitive proxy April 3, 2013 nominating five directors (Golub, Kurz, Smith, McManus, Chase) for the 2013 AGM. Follows Elliott's earlier 'Perspectives on Hess' deck (Jan 2013), but proxy_fight is more specific than follow_up here.