Will incoming CEO Mike Henry carve a new path for BHP?
BHP, still a JSE heavyweight despite its steady exit from SA, has picked an insider to lead the company
The changing of the guard at the world’s largest mining company will see longtime employee (and amateur guitarist) Mike Henry taking up the reins at BHP in the new year.
With investments in iron ore, copper, coal and petroleum and a market value of R675bn, BHP is the second-largest company on the JSE, despite having systematically divested from SA to the point of having no discernible presence in the country today.
That’s quite a change from 2001, when Australian group Broken Hill Proprietary merged with London-listed but SA-focused mining house Billiton, of which Brian "The Ego Has Landed" Gilbertson was then CEO.
While BHP as it’s now known — it dropped the "Billiton" from its name in November last year — is barely recognisable from its first incarnation, it still holds huge clout on the JSE’s top 40: a weighting of 11.25% on the index, which makes it a key stock in most SA pension and tracker funds.
Henry, 53, pipped competitors to the post with his 30 years’ experience in the global mining and petroleum industry spanning operational, commercial, safety, technology and marketing roles.
He was born into a working-class family in Vancouver, Canada. His mother was a nurse and his father was a prison guard and later worked in security.
Henry received his BSc in chemistry at the University of British Columbia and after a period of teaching English in Japan, where he met his wife, returned to Vancouver where he landed a job with the Mitsubishi Corp in 1990, gaining international exposure in resources across Canada, Japan and Australia.
In 2003 he made the move to BHP, where he worked in business development and then in the marketing and trading of a range of mineral and petroleum commodities.
He held various positions in the company, including president of coal; president of health, safety and environment, marketing and technology; and chief marketing officer.
He was appointed to the executive leadership team in 2011 and in 2016 was made president of operations of Minerals Australia, where he led 40,000 people across six assets.
Impressive as his pedigree may be, the market wasn’t exactly thrilled about his appointment: BHP’s share price dipped 1.5% on the day of the announcement.
While the company needs a leader to steer it through coming challenges as growth in China wanes and investor pressure around climate change mounts, the market had hoped BHP would introduce some fresh blood and new ideas.
According to Peter O’Connor, metals and mining analyst at Australian-based Shaw & Partners, market chatter since 2018 has focused on the lean internal pickings of BHP’s "bench" and the "reinvigoration" option of an external candidate.
"A fresh approach at the top has always been on the markets’ radar," O’Connor says. "We had hoped for an external agent of change in the CEO transition so as to provide a catalyst to free up any BHP baggage and harness the opportunity in the assets and, most importantly, the employees."
Even so, O’Connor believes BHP will continue to thrive, with future performance underpinned by a number of "crown jewel" assets in iron ore, metallurgical coal, copper and petroleum.
According to BHP, outgoing CEO Andrew Mackenzie leaves behind a streamlined and more productive BHP.
He was instrumental in BHP spinning off South32 in 2014, as well as last year’s sale of its underperforming US shale oil and gas business.
BHP posted a record final dividend of 78USc a share for the year ended June, despite flat operating profit of $16.8bn.
Henry, meanwhile, has indicated that he plans to unlock greater value from BHP’s ore bodies and petroleum basins.
He is highly incentivised to do so: his base salary of $1.7m represents only 25% of his actual remuneration, with 75% depending on incentive plans.
Investors may take comfort that at least Mackenzie is banking on Henry — quite literally.
In a new remuneration policy recently approved by shareholders, BHP introduced a requirement for the CEO to continue to hold company stock for two years beyond retirement. While this requirement is not yet technically applicable to Mackenzie, "to demonstrate his commitment to and confidence in BHP’s future success, Mr Mackenzie has voluntarily committed to comply with this post-retirement shareholding requirement", says BHP.