Form 4: Hess Executive's Equity Holdings Convert to Chevron Shares Post-Merger

Hess Corporation's EVP, General Counsel & Secretary, Timothy B. Goodell, converted all his Hess equity and derivative holdings into Chevron shares and cash awards as part of the previously announced merger.

Summary

• Timothy B. Goodell, Executive Vice President, General Counsel & Secretary of Hess Corporation, reported changes in his beneficial ownership of Hess securities.
• The reported transactions are effective as of July 18, 2025, which is the anticipated effective time of the merger between Hess Corporation and Chevron Corporation.
• Goodell disposed of 190,092 shares of Hess Common Stock, resulting in 0 shares beneficially owned following the transaction. This amount includes 37,675 shares previously held in escrow.
• Under the merger agreement, each outstanding share of Hess common stock was converted into the right to receive 1.025 shares of Chevron common stock.
• All outstanding 2023 Performance Share Unit (PSU) awards, totaling 9,648 units (representing 20,261 underlying shares), were deemed earned at the maximum level and converted into restricted cash awards.
• All outstanding Hess stock options, totaling 40,297 options, were converted into corresponding Chevron stock options based on the 1.025 exchange ratio, retaining their original terms and conditions.

Sentiment

Score: 7

Explanation: The filing is a procedural update related to a pre-announced merger, indicating the smooth progression of the transaction and the conversion of executive equity holdings under favorable terms (PSUs at maximum). It provides clarity on the post-merger treatment of executive compensation, which is generally positive for stakeholders by reducing uncertainty.

Positives

• The merger agreement provides clear terms for the conversion of executive equity holdings, ensuring a defined outcome for their value post-merger.
• Performance Share Units were earned at the maximum level, indicating favorable terms for the executive's incentive awards.

Risks

• The completion of the merger is subject to the terms and conditions outlined in the merger agreement.
• The future value of the converted Chevron shares, restricted cash awards, and Chevron stock options is subject to Chevron's stock performance and market conditions.

Future Outlook

The filing indicates the anticipated effective time of the merger between Hess and Chevron Corporation on July 18, 2025, at which point Hess equity and derivative securities will be fully converted according to the merger agreement terms.

Management Comments

• "Pursuant to the Agreement and Plan of Merger, dated October 22, 2023 (as amended, the 'merger agreement'), by and among Hess, Yankee Merger Sub Inc. ('Merger Sub') and Chevron Corporation ('Chevron'), at the effective time of the merger of Merger Sub with and into Hess on the closing date (the 'Effective Time'), each outstanding share of common stock of Hess (except as otherwise specified in the merger agreement) was converted into the right to receive 1.025 (the 'exchange ratio') shares of common stock of Chevron."
• "Pursuant to the merger agreement, at the Effective Time, each then outstanding Performance Share Unit (PSU) award was deemed to be earned at the maximum level and converted into a restricted cash award..."
• "Pursuant to the merger agreement, at the Effective Time each then outstanding Hess stock option was converted into a corresponding Chevron stock option based on the exchange ratio, subject to the same terms and conditions applicable to such award immediately prior to the Effective Time."

Industry Context

This filing is a direct consequence of a significant merger in the energy sector, where a major integrated oil company (Chevron) is acquiring an exploration and production company (Hess). Such mergers are common in the industry for consolidation, asset acquisition (e.g., Hess's Guyana assets), and achieving economies of scale.

Comparison to Industry Standards

• The 1.025 exchange ratio for the Hess-Chevron merger is a specific deal term. A detailed comparison to other major oil and gas mergers (e.g., ExxonMobil-Pioneer Natural Resources, Occidental-Anadarko) would require an analysis of their respective deal structures, premiums, and asset valuations, which is beyond the scope of this Form 4.
• The conversion of executive equity awards (PSUs at maximum, options converted) is a standard practice in M&A to ensure continuity and align executive incentives post-merger, similar to how other large-scale energy sector acquisitions handle executive compensation.

Stakeholder Impact

• Shareholders: Hess shareholders will receive Chevron shares based on the 1.025 exchange ratio upon merger completion.
• Employees: Executives' equity awards are being converted, providing clarity on their compensation post-merger.

Next Steps

• Completion of the merger between Hess Corporation and Chevron Corporation on or around July 18, 2025.
• Conversion of all remaining outstanding Hess common stock into Chevron common stock at the 1.025 exchange ratio.
• Conversion of all remaining outstanding Hess Performance Share Units into restricted cash awards.
• Conversion of all remaining outstanding Hess stock options into Chevron stock options.

Key Dates

Recommendation

Keywords

Hess Corporation, Chevron Corporation, Merger, SEC Form 4, Equity Conversion, Stock Options, Performance Share Units, Executive Compensation, Corporate Governance