As its new chairman studies to further reshape the board, the future of Andrew Mackenzie, the BHP Billiton boss, has come under renewed scrutiny ahead of the miner’s AGMs.
Investors have prompted BHP to start succession planning as Scottish-born Mackenzie nears his fifth anniversary as chief executive – and his 10th anniversary with the firm– in March 2018.
A former BP executive, Mr Mackenzie, has been under extreme pressure to raise shareholder returns after Elliott Advisors, an activist investor, started campaigning for a shake-up in strategy earlier in 2017. In June, it called for BHP’s new chairman, Ken MacKenzie, to “review the executive management team.” The Anglo-Australian mining giant has been taken into a number of strategic reverses in recent months, revealing that it would expedite the sale of its costly onshore US shale assets and delay the development of a potash fertiliser mine that is located in Canada – plots that had been promoted by Mr Mackenzie.
A BHP shareholder stated: “The number-one item that comes up in conversation between investors is Mackenzie.” Another investor stated that BHP would be required to look to external candidates when it pressed the button on revisions at the top. “We think the culture within BHP needs a good shake, if not a change,” said the investor.
The new chairman, who assumed the role in September and was previously the boss of Amcor, a packaging giant, is assumed to be encouraging board members to contemplate stepping down after nine years, in line with suggested best corporate practice.
This could mark three directors declare their imminent retirement in the next 12 months.
Joined by two new board members who entered BHP last week, this would result in the separation of directors who approved of the heavy spending of the miner on US shale earlier this decade. Peter O’Connor, a veteran analyst of Sydney-based Shaw & Partners, stated that on past form, a new boss was expected before May 2018.
“History suggests a CEO change is due,” Mr O’Connor said. “Andrew Mackenzie is coming up for five years as CEO and around ten years at BHP – not an unreasonable amount of time as a CEO in the current turbulent corporate world.”
However, Singapore-based head of Aberdeen Asset Management, Hugh Young, stated: “Andrew Mackenzie’s doing a good enough job and five years is a short time for a CEO.”
On October 19, BHP will go before its shareholders at its London AGM and its Sydney AGM on November 16.
The company refused to comment on the matter.