BHP Taps Experienced Executives to Fill Out Changes in Board -- Update
23 Agosto 2017 - 5:21AM
Noticias Dow Jones
By Robb M. Stewart
MELBOURNE, Australia-- BHP Billiton Ltd. said it plans to
replace two directors amid its monthslong tussle with activist
investor Elliott Management Corp., following the miner's decision
earlier this week to exit its American shale oil and gas
business.
Elliot has built a 5% stake in BHP's British shares, and
specifically called on BHP to exit from the U.S. shale business.
Elliott and others have called for deeper changes, including adding
more industry veterans to the board.
It wasn't clear if Elliott had a role in the board changes BHP
detailed Wednesday, including the departure of Grant King just six
months after his appointment. The New York hedge fund declined to
comment. BHP stressed the decisions by Mr. King and Malcolm Brinded
to step down were their own.
Elliott's agitation, made public in April after months of
earlier discussions, brought into the open shareholder disquiet
over BHP's mistimed investment in shale and subsequent impairment
charges. Its tussle with the British-Australian company threatened
to cast a shadow over annual shareholder meetings in October and
November, when shareholders are to vote on board members.
Among its proposals, Elliott had called for the appointment of
Chairman-elect Ken MacKenzie to be followed by new directors with
the skills and experience to simplify BHP's structure, improve
returns and allocate capital "more wisely." Other shareholders
including Tribeca Investment Partners had sounded out potential
board nominees more sympathetic to focusing on shareholder
returns.
Mr. King's departure is a victory for investors unhappy with his
appointment. The new directors bring decades of finance- and
energy-industry experience between them.
Whether a direct response to Elliott or not, the board shuffle
is another victory for the activist fund, which has had mixed
success effecting change at some of its overseas targets recently.
A bid by Elliott to force Dutch paint giant Akzo Nobel to discuss a
merger with U.S. rival PPG ultimately wasn't successful. It also
hit resistance from Australia's government to a proposal that BHP's
dual structure be collapsed around a single main listing in
London.
On Wednesday, outgoing Chairman Jac Nasser said Mr. King had
decided not to stand for election to the board at the annual
meeting because of concerns expressed by some investors.
Mr. Brinded also has opted not to stand for re-election as a
nonexecutive director due to his involvement in ongoing legal
action in Italy related to his past employment at Royal Dutch Shell
PLC, Mr. Nasser said.
In their place, the resource company's board will bring in Terry
Bowen, finance director at Australian coal-to-retailing
conglomerate Wesfarmers Ltd., and former BP PLC veteran John
Mogford from October.
A day earlier, BHP said its American shale operations aren't
core and it would seek to exit, possibly through a series of trade
sales, an initial public offering or other means. Management has
acknowledged the company overpaid to get a foothold in the onshore
U.S. industry and had grown to realize that the business couldn't
be replicated globally as shale-oil opportunities don't exist on
the same scale elsewhere.
Elliott had called for the company to sell the shale operations
and to launch an independent review of its global petroleum
division.
Craig Evans, a portfolio manager at Tribeca in Sydney, said he
applauded the changes at BHP in recent days but declined to comment
on specific directors. "The majority of the board there just
haven't seemed to give adequate direction that shareholders should
expect," he said. "The spread of experience hasn't seemed
appropriate for the type of company that BHP is."
Mr. Nasser, who will step down as chairman at the end of the
month, said he regretted that Mr. King would also leave the board
at the end of the month. Mr. King led Origin energy after it was
spun off from building-products firm Boral Ltd. in early 2000 until
last year, and faced a backlash in Australia at the end of his
tenure for the company's debt-fueled investment in one of three
gas-export projects in Queensland state that launched amid a slump
in prices, weighing heavily on the company's share price.
Mr. Brinded, a director since April 2004, will step down from
the board in October, although Mr. Nasser said he looked forward to
him being able to return in the future. He chose to leave given his
involvement in ongoing legal proceedings in Italy related to Shell,
where he was a director between 2002 and 2012. Italian prosecutors
are investigating Shell's involvement in a US$1.3 billion deal in
2011 with Italian oil firm Eni SpA and the Nigerian government for
a lucrative Atlantic Ocean oil license.
Neither Mr. King nor Mr. Brinded were immediately reachable for
comment.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
August 23, 2017 06:06 ET (10:06 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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