BHP Billiton Names Ken MacKenzie as New Chairman -- Update

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia-- BHP Billiton Ltd. has turned to a packaging-industry veteran to head its board, appointing director Ken MacKenzie to succeed Jac Nasser when he retires after seven years as chairman.

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The appointment puts Mr. MacKenzie in the firing line as BHP faces criticism from activist investors over its underperformance and accusations long-serving directors stood by while billions of dollars were misspent on acquisitions and mistimed share buybacks. New York hedge fund Elliott Management Corp. has led a series of attacks in recent months, calling for a sweeping overhaul of the world's largest listed mining company.

Mr. MacKenzie will assume the role in September, one year after he joined the company's board as a nonexecutive director.

Analysts and shareholders said he was likely viewed as a clean slate within BHP. Elliott in response said it supported the appointment as a first step in bringing much-needed change to the direction of the company.

BHP said the selection had been made after a rigorous search and assessment of potential external and internal candidates, with the assistance of international recruitment firm Heidrick & Struggles.

"Ken MacKenzie brings extensive global executive experience and a strategic approach. He has a proven record of delivering value for shareholders," said Shriti Vadera, a director who led the succession process.

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In a statement, Mr. MacKenzie said he planned to meet with shareholders and other individuals in the coming weeks to understand 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.

The directors voted on Mr. Nasser's successor during meetings in the Chilean capital of Santiago. Mr. MacKenzie and the rest of the board weren't available to comment, BHP said.

The former managing director and chief executive of Amcor Ltd. was the obvious choice among the rumored candidates since he was a relatively fresh face on BHP's board, said Brenton Saunders, a portfolio manager at BT Investment Management in Sydney. It marks a "changing of the guard" that should make it easier for BHP to review its legacy assets, particularly the oil-and-gas operations that some investors have questioned as an ill fit alongside iron-ore, copper and other mining businesses, he said.

BHP has been dragged into a public spat with Elliott that has drawn out criticism from other investors, including Sydney hedge fund Tribeca Investment Partners.

In its latest attack, Elliott earlier this week urged BHP to appoint a strong, experienced chairman with a mandate to refresh a board it accused of allowing shareholder value to be wasted by approving the acquisition of shale-oil and gas assets and poorly timed share buybacks that were at the root of BHP's share underperformance over many years against the Australian benchmark stock index and rival Rio Tinto PLC.

Before that, Tribeca said it had been holding private talks with a number of possible candidates for BHP's board and has pushed for BHP to sell its U.S. oil-and-gas assets.

Elliott, which has almost US$33 billion in assets under management, said it encouraged Mr. MacKenzie to address BHP's capital allocation and underperformance, nominate diverse and experienced directors and review the executive management team. It also renewed its calls for an independent review of the petroleum division and a collapse of the dual-listed structure.

"As CEO of Amcor, Mr. MacKenzie displayed strong leadership qualities as he successfully navigated the company through the financial crisis while making difficult decisions to significantly improve shareholder returns over his decade at the helm," Elliott said.

Mr. MacKenzie, 53 years old, had a 23-year career with Australia's Amcor and was managing director and CEO from 2005 to 2015. He oversaw more than 30 acquisitions during a period of consolidation for the packaging industry that more than doubled Amcor's market value to about $12.5 billion and widened its global footprint. He also oversaw the 2013 spinoff of the domestic Australian and New Zealand assets into Orora Ltd.

Mr. Nasser in a statement said Mr. MacKenzie was an excellent choice to lead the board.

A former president and chief executive of Ford Motor Co., Mr. Nasser joined BHP's board in mid-2006 and took over as chairman in 2010. His predecessor, Don Argus, was also on BHP's board for several years before becoming chairman.

Mr. Nasser guided the company through a tumultuous period, marked by the height of the global commodities boom and a more recent collapse that prompted deep cost-cutting and a slashing of dividend payouts. While he was chairman, the company has steadily ramped up its production of commodities including iron ore and copper, and moved into the U.S. onshore-shale industry but was thwarted by government opposition in its attempt to buy Canada's Potash Corp. of Saskatchewan. BHP also greatly restructured its operations, most notably with the 2015 spinoff of a suite of assets including aluminum, coal and manganese as South32 Ltd.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

June 16, 2017 00:22 ET (04:22 GMT)