Stelliam Sends Letter to Range Resources Board

Stelliam Investment Management LP, a New York City-based investment management company and significant shareholder of Range Resources Corporation (NYSE: RRC) (“Range” or the “Company”), has sent a letter to James Funk, Lead Independent Director of the Board of Range, indicating its intention to vote against the Company’s board nominees and against its advisory vote to approve executive compensation at the upcoming annual meeting, to be held on May 16, 2018.

The full text of the letter follows:

James Funk
Lead Independent Director
Range Resources Corporation
100 Throckmorton Street, Suite 1200
Fort Worth, Texas 76102

cc: Range Resources Corporation Board of Directors

Dear Dr. Funk,

As you know, we have been a shareholder of Range since 2011. As of March 31st 2018 we held approximately 8.9 million Range shares, representing approximately 3.6% of shares outstanding.

We are writing to inform you that we are voting against all current directors at this year’s annual meeting because we believe the board as a group is representing its own and management’s interests instead of the interests of shareholders. We are also voting against the board’s recommendation on Item 2, the say on pay vote. We believe that the actions of Range’s management, with the oversight of the board, have destroyed substantial value at Range. At the same time, the very officers and directors who have been the primary drivers of Range’s poor stock performance have profited at shareholder expense.

We believe compensation should be tied to performance, not who sits in a particular seat. Regarding this point, management’s annual compensation has remained generous over the past four years while the stock has declined approximately 80%.

We have multiple specific concerns. Examples include:

  • The systemic annual awarding of increasing numbers of shares at successively lower prices to the management and board. We have relayed our concern to management and the board when it contacted us for our views, but this practice continues.
  • The board has rewarded failure by approving the payment of enormous “retirement” benefits to executives, including Roger Manny, who as CFO oversaw the disastrous Memorial Resources acquisition.
  • The board has established undemanding performance metrics for management to be paid millions of dollars. For example, the target for production growth in the 2018 short-term incentive program is set such that management would attain the maximum payout even if the company misses its guidance to analysts and investors. Likewise, Range’s target and maximum payout levels for the Finding & Development Cost metric have consistently been set at undemanding levels, with the maximum payout attained at costs well above those achieved by the company in the prior year.

Going forward, we encourage Range’s board members, regardless of who they are, to act in the best interests of shareholders and not of management or themselves.

Ross Margolies
Founder and Portfolio Manager

About Stelliam Investment Management LP

Stelliam Investment Management is a long/short and long only investment management firm based in New York with approximately $2.5 billion in assets under management. The firm was founded by Ross Margolies and began managing assets in 2007.