BHP Taps Experienced Executives to Fill Out Changes in Board

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--BHP Billiton Ltd. (BHP.AU) plans to replace two directors who have opted to leave the resources giant with experienced executives, another win for disgruntled investors.

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The move comes on the heels of BHP's decision to exit its troubled U.S. shale oil-and-gas business following a months-long campaign by activist investor Elliott Management Corp. for the assets to be spun off. The lobbying by the U.S. hedge fund have drawn out public calls from other investors for the resources company to bring in directors with industry experience.

On Wednesday, outgoing Chairman Jac Nasser said recently named director Grant King had decided not to stand for election to the board at the upcoming annual shareholder meeting because of concerns expressed by some investors.

Malcolm Brinded also has opted not to stand for re-election as a non-executive director due to his involvement in ongoing legal action in Italy related to his past employment at Royal Dutch Shell PLC (RDSA), Mr. Nasser said.

In their place, the resources company's board will bring in Terry Bowen and John Mogford from October.

Mr. Bowen has more than 25 years of strategic and financial experience in a number of industries and has been finance director of conglomerate Wesfarmers Ltd., a role he will leave toward the end of the year. Mr. Mogford has over four decades experience in oil and gas, including 33 years at BP PLC (BP) in technical and operational roles.

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The appointments were based on a five-year planning outlook, consideration of their skills and experience, and after exhaustive global searches, Mr. Nasser said.

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, which has built up a 5% stake in BHP's U.K. shares, in April went public with its calls for the company to sell the shale operations and for it to collapse its dual British-Australian structure around a single listing, initially suggesting it should be in London but later revising that to Sydney. It and other investors, including Tribeca Investment Partners, have sought an overhaul of the board to tighten BHP's focus on shareholder returns.

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.

Italian prosecutors are investigating Shell's involvement in buying a rich oil field off the coast of Nigeria. Mr. Brinded was a director of the energy company between 2002 and 2012.

Mr. Nasser said he regretted that Mr. King, who has only been a director since March, would leave the board at the end of the month. He brought extensive oil-and-gas experience, having been managing director and chief executive of Origin Energy Ltd. (ORG.AU) for about 16 years until he stepped down last year, but has been criticized for overseeing Origin's debt-funded investment in liquefied natural gas and a dilutive equity raising. The Australian newspaper reported some shareholders were prepared to vote against his election.

When Mr. Nasser hands over at the end of the month to Chairman-elect Ken MacKenzie, who has been a director for one year, the average tenure of board directors will fall to about 4-and-a-half years from over 5 now.

Mr. Nasser noted that as finance director, Mr. Bowen had been responsible for capital allocation among Wesfarmers' 38 business and had extensive experience transforming and running the operations, focusing on improving cash flows and cost efficiency. Mr. Mogford, he said, also has private-equity experience in addition to deep knowledge of oil and gas.

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

(END) Dow Jones Newswires

August 22, 2017 20:52 ET (00:52 GMT)

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