Andrew Harding to replace Lance Hockridge as Aurizon CEO

Hockridge could receive a termination payout of more than $1m as he hands over the reins at Aurizon to Andrew Harding.

Outgoing Aurizon CEO Lance Hockridge will be replaced by former high-profile Rio Tinto executive Andrew Harding. (Pic Mark Calleja)

Freight rail operator Aurizon has forced long-standing chief executive Lance Hockridge out, tapping former high-profile Rio Tinto executive Andrew Harding as his successor.

Mr Hockridge’s departure was first flagged by The Australian two weeks ago, at which time Aurizon (AZJ) denied that he was leaving the company.

Mr Hockridge, who has held the chief executive role at Aurizon since its float in 2010, will officially stand aside in December after Mr Harding begins at the start of that month.

His replacement joins the group after a sudden June departure from the role of iron ore boss at Rio, with the miner’s new chief executive Jean-Sebastien Jacques quickly making his mark by shunning a former rival candidate for the top job.

Mr Harding had spent 24 years with the mining giant in various capacities.

“Our inaugural managing director and CEO has been a chief architect of our success to date,” Aurizon chairman Tim Poole said.

“Our financial and operating performance metrics have significantly improved since the IPO and he has been successful in bringing many in line with world class performance.”

However, the group admitted Mr Hockridge would receive termination benefits, a signal he was tapped to leave after a year of underperfomance by the company.

Aurizon’s share price has slumped 15 per cent over the past three weeks, a period during which it has released disappointing full-year earnings.

Analysts were underwhelmed by the latest performance update, with UBS tagging the group as one of the “most disappointing large-cap results” of earnings season.

It came following a disastrous end to 2015, as it suffered its biggest one-day drop on record in December following the acknowledgement of hundreds of millions in writedowns and a downgrade to guidance that led to significant job cuts.

Aurizon said Mr Hockridge was entitled to termination benefits as defined in his contract, with a payout above $1 million seen likely.

Just this year the group paid $750,000 in termination benefits to former chief operating officer Mike Franczak.

Mr Hockridge’s contract reveals he is entitled to 12 months’ notice of termination from the group and a payout of up to a year.

His fixed pay for the 2015-16 financial year was tagged at $1.95m.

The departure was not considered sudden, however, with Mr Poole confirming the appointment of Mr Harding came after a global search process.

“Andrew’s ability and experience will be essential in driving the next phase of transformation to increase value for Aurizon shareholders,” Mr Poole said.
Investors and analysts were supportive of the move, with the group’s share price rising 1 per cent to $4.445 at 11.05am (AEST). It jumped as much as 1.8 per cent in opening trade despite weakness in the broader market.

RBC Capital Markets analyst Paul Johnston said the move was necessary after a positive run since a 2010 float came to an abrupt halt last year.

“More recent strategic decisions like the investment in the West Pilbara iron ore project, the shock profit downgrade in December 2015, together with a much more challenging growth environment, support the view that a new chief executive was likely needed to steer Aurizon through the next phase of its development,” he said

“A new chief executive should be able to put even greater focus on productivity and efficiency improvements in this difficult macro environment.”