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BHP has opted for a relatively fresh face to head its board, appointing former packaging executive Ken MacKenzie to replace veteran chair Jac Nasser in September.
Key points:
- Ken MacKenzie, who has a background in packaging, to be new BHP chair
- Significant challenges include dealing with the attack of an activist investor and the legacy of the mine disaster in Brazil two years ago
- BHP's share price has halved since 2011
Mr MacKenzie only joined BHP's board in September last year after a decade running Melbourne-based global packaging business Amcor.
He beat two other long-serving, internal candidates for the position — Westpac chair Lindsay Maxstead and the mining veteran and Orica chair Malcolm Broomhead.
BHP under attack from activist investor
Mr MacKenzie will find a number of immediate challenges in his in-tray.
BHP has come under attack from the activist investor Elliott Associates which is looking for a complete overhaul of operations and the divestment of oil and gas assets.
While US-based Elliott doesn't have a large shareholding in the company, it is known to be a persistent agitator and released another tirade this week accusing the board of presiding over the destruction of billions of dollars of shareholder wealth in recent years.
"BHP has an entrenched board, with long-tenured directors having approved the disastrous acquisitions and poorly timed share buybacks that are at the root of much of today's underperformance," Elliott said in release ahead of the BHP announcement.
"A significant upgrade in directors is needed."
Elliott's immediate reaction was one of support for Mr MacKenzie, saying: "It is a constructive step in bringing much needed change to the direction of BHP."
"As a large investor in BHP, Elliott encourages Mr MacKenzie to use his leadership skills to address BHP's poor capital allocation and underperformance, nominate diverse and qualified directors, and review the executive management team," Elliott said.
Mr MacKenzie will also have to deal with the legacy of the tragic Samarco tailings dam collapse in Brazil which killed 19 people and caused an incalculable environmental disaster.
No decision has been made on reopening the mine, but it is unlikely this year.
Share price has halved since 2011
There is also the on-going struggle with volatile commodity markets. Two of its principal global markets, iron ore and oil, are currently struggling to clear significant gluts.
While BHP has rebounded strongly from its low point of early 2016, it has still lost ground recently and is down 9 per cent in the year-to-date as demand from China cools.
Its current share price is roughly half its peak of almost $45 per share in 2011.
A disciplined manager and deal maker
Mr MacKenzie currently is a member of the board's sustainability committee and has a background in both engineering and management.
"Ken MacKenzie brings extensive global executive experience and a strategic approach," BHP's senior independent director Shriti Vadera said in a release to the ASX.
"He has a proven track record of delivering value for shareholders.
"He has the operational and financial capabilities as well as the rigour necessary to effectively oversee BHP's capital allocation framework."
Mr MacKenzie was a 23-year veteran at Amcor and was widely acknowledged as turning the company's fortunes around.
He is highly regarded as a disciplined operator and an astute deal maker, picking up some cheap assets, including Rio Tinto's packaging business, during the GFC.
He was born in Canada, but has lived in Melbourne for more than a decade.
Mr MacKenzie said he would be engaging with shareholders and other stakeholders in coming weeks to gain insights into their perspectives.
"I am committed to the creation of long-term value for all of our shareholders and will work tirelessly with the Board and management to achieve this," he said.
Mr Nasser will retire from the board in September, having served as chairman since 2010.
Topics: mining-industry, australia
First posted